SACRAMENTO, Calif. — Owning a car now is more expensive than it was a year ago and the increase is even more severe in California. New data shows the costs have risen to more than $14,000 a year.
ABC10 spoke with an expert to find out what’s behind the spike and how to take out some of the financial sting.
“We saw early in the pandemic… the price of a car go up. That has not really changed but now we’ve seen increases in everything from fuel to maintenance costs to insurance costs, and depreciation is happening faster,” said Northern California AAA spokesperson, John Treanor.
AAA’s annual ‘Your Driving Costs’ data shows the annual cost of owning a new car soared compared to last year.
After considering 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. It’s a 12% jump over 2022.
In California, drivers can expect to pay $14,390 per year, or 18% more than the national average.
Experts say buying a new car isn’t something to rush into, especially in the current financial climate.
“Create a budget that encompasses all aspects of ownership, not just that monthly payment. Account for things like insurance costs, fuel costs, maintenance costs,” said Treanor.
Here’s what you can do right now if you’re planning on buying a new car:
- AAA recommends starting early. There might be limited inventory and wait times for the specific model you want, so you might need to pre-order.
- Try to get pre-approved from a financial institution before discussing finance rates with the dealer. It gives you a benchmark for negotiating rates.
- Keep negotiations for car cost, finance rates and trade-in value separate from each other.
- You might be surprised by what you can get for trading in your used car but check multiple sources to determine the value.
