Warning - Sticker Shock Ahead!

AAA Finds Annual Vehicle Ownership on the Rise

family buying car looks at mileage sticker

VIRGINIA BEACH, Va. (September 12, 2019) – It’s going to cost more for those looking to buy a new car this year. Finance costs on new car purchases have jumped 24% in 2019, according to new AAA research, pushing the average annual cost of vehicle ownership to $9,282, or $773.50 a month. That’s the highest cost associated with new vehicle ownership since AAA began tracking expenses in 1950 and a reminder that the true costs of owning a vehicle extend far beyond maintenance and fuel.

 

“Finance costs accounted for more than 40% of the total increase in average vehicle ownership costs,” said Georjeane Blumling, vice president of Public Affairs for AAA Tidewater Virginia. “AAA found finance charges rose sharply in the last 12 months than any major expense associated with owning a vehicle.”

 

The spike in finance charges was fueled by rising federal interest rates and higher vehicle prices. It comes as 72-month car loans have become increasingly common – meaning car buyers are paying more, and longer, for vehicles that lose value the moment they’re sold. Long-term loans offer lower monthly car payments, but they ultimately cost the consumer more. AAA found that, on average, every 12 months added to the life of a loan adds nearly $1,000 in total finance charges.

 

The new figures come from Your Driving Costs, which reviews nine categories of vehicles – consisting of 45 models – to determine the average annual operating and ownership costs of each. AAA focuses on top-selling, mid-priced models and compares them across six expense categories: fuel prices; maintenance/repair/tire costs; insurance rates; license/registration/taxes; depreciation; and finance charges. Annual average costs increased in each category.

 

Other key findings of this year’s Your Driving Costs include:

 

  • Average fuel cost rose to 11.6 cents per mile, 5% higher than last year. The per-mile increase was driven by gasoline prices, which are up 15.6 cents per gallon over the timeframe covered by the study. Electricity prices for EV charging also rose 0.1 cent per kilowatt-hour (0.08%), but the market share of the electric vehicles in the study (0.48%) makes the effect of this increase on the overall average fuel cost negligible. Fuel costs vary widely by vehicle type, ranging from a low of 3.65 cents per mile for electric vehicles, to 15.67 cents per mile for pickup trucks.
  • Average maintenance and repair costs climbed marginally to 8.94 cents per mile, up 8.9% over last

year. The increase was fueled by the growing complexity of vehicle systems and an updated methodology for calculating repair costs.

  • Electric vehicles had the lowest maintenance and repair costs – 6.6 cents per mile – while medium-sized SUVs had the highest at 9.6 cents per mile.
  • The cost of licenses, registration fees and taxes rose $14 to $753 per year, an increase of 1.9%
  • Average annual costs by new vehicle category (based on 15,000 miles driven annually):

 

New Vehicle Category

Annual Cost

Small Sedan

$7,114

Hybrid

$7,736

Electric

$8,320

Small SUV

$8,394

Medium Sedan

$8,643

Medium SUV

$10,265

Large Sedan

$10,403

Pickup

$10,839

 

 

The AAA study gives the public a window into the true costs of owning and operating a vehicle by quantifying expenses that owners may overlook. Additional information and details can be found at AAA.com/YourDrivingCosts.

 

After purchasing a home, buying a vehicle is probably a consumer’s second biggest expense. Research is key, as is acting carefully and methodically. AAA.com/autobuying is a comprehensive resource that can help make the process more manageable. Here are some tips to keep in mind:

 

  • Know what you can afford to spend before going to the dealership. Determine your budget and stick to it.
  • Minimize total finance costs by getting the shortest loan term you can afford.
  • Seasonally, the best times to buy tend to be the last two weeks of December – when dealers are trying to hit year-end goals – and, to a lesser extent, between July and October. That’s when dealers are trying to clear lots to make way for the next year’s models.
  • The best time to buy is the end of the month because sales managers like to build campaigns around monthly quotas. Shop toward the end of the month and you’ll find a dealer may offer additional price concessions.
  • Consider a late-model, gently used vehicle. New cars lose around 20% of their value the moment they leave the lot, so you can save big if you look for a car that’s a year or two old. Your insurance costs could be less, too.
  • If you belong to AAA or a similar organization, you may qualify for dealer discounts. Dealer networks sometimes agree to limit profits when selling to club members, though the deals will be limited to certain makes and models.

 

Methodology

AAA’s Your Driving Costs study employs a proprietary AAA methodology to analyze the costs of owning and operating a new vehicle in the United States. The methodology incorporates standardized criteria to estimate the costs of using a new vehicle for personal transportation over five years and 75,000 miles of ownership. Your Driving Costs is designed to help consumers make informed vehicle purchase decisions and budget for annual automotive expenses.

 

As part of North America’s largest motoring and leisure travel organization, AAA Tidewater Virginia provides its more than 330,000 members with travel, insurance, financial and automotive-related services. Since its founding AAA Tidewater Virginia has been a leader and advocate for the safety and security of all travelers. For more information, visit AAA.com and follow us on Twitter at Twitter.com/AAATidewaterVA or Facebook at facebook.com/AAATidewaterVirginia.

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