BOISE – If you’re in the market for a new vehicle, you might be able to stretch your budget a bit more this year.

According to new research by AAA, the average total cost of owning and operating a new vehicle is $11,577 per year – a $719 decrease from the previous year.  For over 70 years, AAA’s Your Driving Costs analysis has helped drivers make informed purchase decisions.

“The calculations are getting more and more precise, factoring in everything from the cost of fuel, insurance, routine maintenance, and much more,” says AAA Idaho public affairs director Matthew Conde.  “Before you sign on the dotted line, you need to seriously consider the full picture.”

For AAA’s research, which assumes the new vehicles studied are driven for 15,000 miles per year for five years, operating costs for internal combustion engine (ICE) vehicles, electric vehicles (EV), and hybrids are dramatically different in some vehicle categories, and surprisingly similar in others:

Where did costs improve?

  • Depreciation is the biggest expense associated with buying a new car, and it kicks in the minute you leave the dealership.  This year, depreciation fell for the vehicles AAA studied – to $4,334 in value per year compared with $4,680 the previous year.
  • Finance charges decreased by an average of 15% from the previous year – from $1,332 to $1,131 per year.
  • Fuel prices also provided a helping hand, with an average fuel cost of 13 cents per mile, a nearly 13% drop from the previous year.

Different vehicle categories – the pros and cons of ownership

“Smaller vehicles provide the lowest barrier for new car ownership.  But it always comes down to selecting the vehicle that is the right match for your lifestyle,” Conde said.

AAA’s analysis of nine vehicle categories yielded the following cost comparisons per mile:

“Vehicles become an extension of their owner’s personality.  In some cases, people spend more than their budget may comfortably allow on the latest technology or luxury features,” Conde said.  “In some cases, a used car may be a wise investment to reduce some of the cost of ownership.”

Cost purchase considerations

Here are some things to know before you buy:

  • Depreciation – the annual loss in value from what you paid vs. the vehicle’s worth as used
  • Finance charges – the costs of a loan (including interest), taxes, and first year of registration
  • Fuel – Does your new ride require a higher grade of gasoline? Etc.
  • Insurance – Newer vehicles may cost more to insure than your current car
  • License, Registration, and Taxes
  • Maintenance, Repairs, and Tires – Plan ahead to protect your investment

“Make sure you have a good discussion with the dealership, your lending institution, and your insurance agent to get all the bases covered,” Conde said.  “Prioritize the most important things that your vehicle needs to have, get pre-approved for a loan, and then budget accordingly.”

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