AAA launches online calculator to help car buyers budget for their next vehicle purchase
By AAA of Western and Central New York
For over 70 years, AAA's “Your Driving Costs” has provided members, consumers and the media with information on the average costs of owning and operating a new automobile. According to the latest research from AAA, the average yearly cost to own and operate a new vehicle in 2022 is $10,728, or $894 per month. A considerable increase from 2021, when the average yearly cost was $9,666, or $805.50 per month. Not surprisingly, fuel prices are the most significant factor pushing this year's average annual price tag.
"Consumers are paying more attention when purchasing a new vehicle since everything is more expensive right now," said Greg Brannon, AAA's director of automotive engineering. "With the recent increase in fuel prices, more and more people want to know the true costs of owning a car beyond their monthly payment."
In the most recent analysis, AAA evaluated nine categories of vehicles – consisting of 45 models – to determine a new vehicle's average annual operating and ownership costs. AAA selects top-selling, mid-priced models and compares them across six categories: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation, and finance charges. The study assumes a five-year ownership period, with the vehicle being driven 15,000 miles/annually (or a total of 75,000 miles).
For this year's study, fuel costs were projected based on a weighted average of the first five months of 2022. During that time, fuel prices averaged 17.99 cents per mile, or $3.999 per gallon. Gas prices have seen a dramatic climb since early March, and, as a result, the cost of vehicle ownership has increased accordingly since the “Your Driving Costs” evaluation was completed. Because of the high variability of fuel costs, consumers are considering alternative ways to budget for the cost of vehicle ownership. One way they do this is by exploring electric vehicles as an option for their next car purchase. In fact, a recent AAA consumer survey found the main factor behind Americans' desire to buy an electric vehicle is to save on fuel costs.
This year's “Your Driving Costs” analysis reveals that electric vehicles have the second-lowest annual ownership costs behind small sedans. For comparison, an electric vehicle owner will spend about 4.0 cents per mile to charge their vehicle at home, while the owner of a gas-powered vehicle will spend an average of 18.4 cents per mile to gas up. Assuming both drive 15,000 miles/year, it would cost approximately $2,700/year to fuel the gas-powered vehicle and $600/year to charge the electric vehicle. A difference of $2,100 annually.
Beyond fuel savings, electric vehicles have the lowest maintenance, repair and tire costs. This is because gas-powered vehicles require additional maintenance such as oil changes, air filter replacements and inspection of mechanical components not present in electric vehicles. Additionally, electric vehicles have the lowest fees due to federal and state rebates offered to buyers of new electric vehicles as a purchase incentive.
New this year, AAA launched an online “Your Driving Costs” calculator to provide a more interactive and personalized breakdown for car shoppers. This online tool employs the same methodology as AAA's annual analysis of new car ownership. It allows users to view comprehensive cost analyses of a specific vehicle by category to determine ownership costs that best align with their budget. Data is available for new and used vehicles (five model years back), and consumers may customize the results based on location and other personal driving tendencies.
Consumers can also use the AAA Car Guide to learn about the latest automotive technology and research vehicles that best suit their needs. AAA urges car buyers to know all the expenses associated with ownership to negotiate the best deal for their budget and recommends consumers follow these steps before purchasing:
√ Start early! Due to limited inventory, consumers may have fewer choices regarding a specific vehicle model. They may have to wait for delivery or even preorder the vehicle of their choice.
√ Obtain preapproval from their financial institution (e.g., bank, credit union, AAA, etc.) before discussing finance rates with the car dealer. By getting preapproval, they will have a threshold of the best lending rate they'll pay. Buyers can use their preapproval to negotiate if the dealer offers a higher rate.
√ Create a budget and factor in the different elements of ownership before purchase – not just monthly payments. Other factors to consider when making the budget include insurance, gas, routine maintenance, etc.
√ Typically, three negotiations occur when purchasing a vehicle: the cost of the car, the finance rate and the trade-in value. Keep each transaction/negotiation separate from the other.
Calculate annual driving costs through the new AAA “Your Driving Cost” calculator. Visit AAA Newsroom and discover several resources consumers can use while car shopping, including the AAA Car Guide and AAA's car buying program.
Started in 1902 by automotive enthusiasts who wanted to chart a path for better roads in America and advocate for safe mobility, AAA has transformed into one of North America's largest membership organizations. Today, AAA provides roadside assistance, travel, discounts, financial and insurance services to enhance the life journey of 63 million members across North America, including over 56 million in the United States. To learn more about all AAA has to offer or to become a member, visit AAA.com.
As upstate New York’s largest member services organization, AAA Western and Central New York provides more than 887,000 members with travel, insurance, financial and automotive-related services. Since its founding in 1900, AAA has been a leading advocate for the safety and security of all travelers.