Saturday, 15 June 2024

Annual cost of owning a new car soars to over $12,000

WALNUT CREEK, Calif. — The true cost of owning and operating a new car increased sharply this year, and those expenses are substantially higher in California, according to AAA's annual Your Driving Costs, or YDC, data.

After taking into account the costs associated with fuel, maintenance, insurance and depreciation, the average yearly expense of a new car is $12,182 per year, or $1,015 per month.

That's a 12% jump over 2022 where costs were $10,728 per year or $894 per month.

In California, that cost rises to $14,390 per year.

“Vehicle ownership expenses vary depending on the vehicle’s make, model, and where you live,” explained John Treanor, spokesperson for AAA Northern California. “Understanding the long-term financial commitment associated with buying a new car is essential.”

Car prices rose dramatically due to global supply chain issues and limited inventory. The annual costs of owning a new vehicle were also be affected by:

Depreciation, which is the difference between the value of a car when it is purchased and its value when it is sold. YDC projects new cars will depreciate in value more quickly than before, at an average of $4,538 per year.

A jump in new vehicle prices (up almost $1,600) compared to used vehicle values that have declined in the last year.

More oversized, luxurious vehicles, loaded with extra features in production that bump up prices further.

When purchasing a new car, it’s important to remember these AAA Northern California tips:

• Start early. Considering limited inventory, potential wait times for specific models, and the need for pre-orders, start the car buying process early.

• Get pre-approved. Secure pre-approval from a financial institution before discussing finance rates with the dealer. This provides a benchmark for negotiating rates.

• Budget planning. Create a budget that encompasses all aspects of ownership, not just monthly payments. Account for insurance, fuel, maintenance and more.

• Negotiation separation. Keep negotiations for car cost, finance rates and trade-in value separate from each other.

• Trade-in evaluation. Check multiple sources to determine the value of your trade-in.

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