Updated June 17, 2026
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Total cost of car ownership (TCO) covers depreciation, loan interest, insurance, fuel, maintenance, tires, registration, and taxes. AAA estimates average annual car ownership costs at around $10,000-12,000 per year for a new mid-size sedan, or roughly $800-1,000 per month all-in.
The main cost categories
| Category | Typical annual cost |
|---|---|
| Depreciation | $2,000-4,000 (largest for new cars) |
| Loan interest | $1,000-2,500 (depends on rate/balance) |
| Insurance | $1,500-2,500 (varies by driver/coverage) |
| Fuel | $1,500-2,500 (depends on MPG and miles) |
| Maintenance and tires | $800-1,500 |
| Registration and taxes | $200-600 |
What is the $3,000 rule for cars?
A repair decision heuristic: if a repair costs more than about $3,000 and the car is worth only modestly more than that repair, you may be better off replacing the vehicle. It weighs repair cost against the car's remaining value and reliability.
What does 5-year TCO mean?
Five-year TCO adds up all ownership costs over a 60-month period, including depreciation, financing, insurance, fuel, and maintenance. It is a common comparison tool when choosing between vehicles with different prices and running costs. A less expensive car with higher insurance and fuel costs can have a higher 5-year TCO than a pricier but efficient alternative.
How to calculate TCO for your car
1. Estimate annual depreciation (see the car depreciation guide).
2. Add annual interest paid (use the Auto Loan Calculator).
3. Add your actual insurance, fuel, and maintenance estimates.
4. Sum them for annual TCO; multiply by years for total period cost.
Try the Car Payment Calculator
Enter your price, down payment, trade-in, tax rate, and loan term to see your exact monthly payment before you visit the lot.