This Is How Much Car Ownership Costs the Average Person. How Do You Stack Up?

Your car may cost you more than you realize.

For most people in the U.S., owning a car isn't a luxury; it's completely necessary to simply get to work, the grocery store, or other daily activities. Unfortunately, that necessity often means dedicating a big chunk of your personal finances to your vehicle and its upkeep.

But exactly how much of our budgets are going to owning a vehicle? More than you probably think -- and that number is growing every year.

According to data from AAA, U.S. drivers spend an average of $10,728 a year owning and operating a new car. That's up more than $1,000 from the $9,666 we were spending just last year.

$894 a month goes to owning a new vehicle

In its study, AAA looked at 45 different vehicle models, covering a range of top-selling, mid-priced options. It compared six categories:

• Fuel
• Maintenance and repairs
• Depreciation
• Insurance
• Fees and taxes
• Finance charges

A good chunk of your ownership costs, especially for a new vehicle, will be lost to depreciation. That's the amount of the car's value that is lost every year as it ages. But it's the increase in fuel prices that have driven much of the year-over-year rise in new car ownership costs.

Electric vehicles have second-lowest ownership cost

If you've thought about going electric every time you've hit the gas station lately -- you're not alone. Another AAA study found that a quarter of car buyers are considering making their next vehicle a fully electric one. Of those responders, a whopping 77% say saving on fuel costs is the biggest incentive.

And they're not wrong in thinking the switch could save money. Electric vehicles have the second-lowest ownership cost according to AAA. And a big chunk of that is thanks to the fuel savings. Driving 15,000 miles a year and averaging $0.184 per mile, a fully electric vehicle would save you about $2,100 a year in fuel.

There are other considerations, however. For one thing, electric vehicles are more expensive to purchase outright than comparably sized gas-powered models. There are also practical considerations, such as your vehicle's range, charging station availability, and the inevitable cost of replacing the battery.

Insurance and financing costs also increasing

Although fuel was a big contributor to the increase in year-over-year ownership costs, that's not the only place numbers are going up. Just about everything that goes into car ownership has gotten more expensive lately.

Road traffic is back to pre-pandemic levels, and it seems as though many folks forgot the rules of the road while they were at home. Accidents have gone up significantly -- and, with that, auto insurance costs are skyrocketing. Increases of 15% to 20% aren't uncommon.

The price of purchasing a new car has risen quite a bit over the last few years. A good deal of that increase can be blamed on inventory shortages.

Essentially, dealers have no incentive to offer discounts, since they're already having trouble keeping popular models on their lots in the first place. In-demand vehicles not only have wait lists, but they have been selling for well above MSRP -- so much so, that manufacturers have actually had to reprimand dealerships in some cases.

Even if you can find a way to pay MSRP on your new car, the recent interest rate hikes mean your auto loan is going to cost you more than this time last year -- or even six months ago.

At the end of the day, buying and operating a late-model used car is still your more economical option. But with used car inventory just as sparse as that for new cars, finding one may not be as easy as it used to be. In many cases, your best bet may be to stick to your current vehicle if possible.