Public Relations Manager, PA
O: (302) 299-4426
C: (302) 353-6563
Sr. Public Aff. Specialist, CT/DE/NJ/PA
O: (302) 299-4168
C: (610) 291-7312
AAA: True Cost Of Annual Vehicle Ownership Rises To $9,282
Spike In Finance Costs Drives Increase
PHILADELPHIA, PA (Thursday, 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 John Nielsen, AAA’s Managing Director for Automotive Engineering & Repair. “AAA found finance charges rose more sharply in the last 12 months than any major expense associated with owning a vehicle.”
The spike in finance charges – which rose from $744 to $920, a nearly $200 increase -- 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.
“Smaller monthly payments may be tempting to potential buyers, but they can add big costs in the long run,” Nielsen said.
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-pricedmodels 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.
Of all costs, depreciation, a measure of how quickly a car loses value, remains the single biggest cost of ownership, accounting for more than a third (36%) of the average annual cost. It slowed a bit this year, with vehicles included in the study losing an average of $3,334 a year, up $45 – or 1.4% – from last year. In 2018, depreciation rose by $117, or 3.7%. In two vehicle classes this year – small and medium sedans – depreciation costs actually declined.
“The true cost of vehicle ownership involves more than the sticker price and what you pay at the pump. Before you make any vehicle purchase, it is important to determine ownership and operational costs and compare them to your current and future financial situation,” said Jana L. Tidwell, manager of Public and Government Affairsfor AAA Mid-Atlantic.
Other key findings of this year’s Your Driving Costs include:
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:
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.
Follow us on Twitter: @AAAPhillyNews
7777 Brewster Avenue
Philadelphia, PA 19159
AAA provides automotive, travel and insurance services to 57 million members nationwide and more than three million members in Pennsylvania. AAA advocates for the safety and mobility of its members and has been committed to outstanding road service for more than 100 years. The not-for-profit, fully tax-paying member organization works on behalf of motorists, who can now map a route, find local gas prices, discover discounts, book a hotel and track their roadside assistance service with the AAA Mobile app for iPhone, iPad and Android. For more information, visit www.AAA.com.