How to Calculate the Actual Monthly Cost of a Car

There's a lot about owning a car that requires budgeting. These tips can help you figure out what that new car is actually going to cost you.


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The price on the window of that new car is an important starting point as you being your search for a new vehicle, but it's not everything. As you work to make a budget, remember that it's just part of the picture: you want to understand how to calculate the actual monthly cost of a car, which includes taxes, fees, and ongoing expenses. This knowledge can help you feel confident when reviewing the costs associated with the full price of a car, and it can help ensure that you budget the right amount.

Here are some upfront costs and some ongoing costs to consider when creating your car buying budget.

Costs When You First Purchase Your Car

Before you purchase your car, you're going to need to know both the base price of the car and a few key fees that are likely to come up, though some vary from state to state. Here are the costs you're likely to have upfront:

  • Most states will charge between 2% and 8% in sales tax on your car's price.
  • Registration and title fees can range from less than $50 up to $200 or more depending on the state. It's important to be the legal owner of the car and have the proper license plates.
  • If you're buying your car from the dealership, they often have a fee of some kind that is specifically for processing or delivering a car. These can be named a few different things depending on where you're buying. If you don't recognize a fee and are looking for room to negotiate the overall cost of your car, it can't hurt to ask if they can waive or discount that fee or if it is required.

The Consumer Finance Protection Bureau has a helpful worksheet that allows you to compare cars side-by-side with some of these fees and costs. The document also provides insight into how to calculate the finance charge on car loan amounts.

Ongoing Costs of Your Car

The payments on your car loan is just one part of the monthly cost of a car. When creating a budget for that new car consider a few of these other expenses:

  • Auto insurance premiums are often billed on a monthly basis and should be included in your budget.
  • You'll need to develop a plan for how many miles you expect to drive so that you can approximately budget for gasoline costs.
  • Most cars have some routine maintenance needs, like having the oil changed, even when they are functioning well. Depending on how much you use the car, this maintenance might need to be performed more frequently.
  • You may not need many repairs at the beginning of car ownership, but it's a good idea to start building up some money for future car repairs since they can be expensive and come at unexpected times.

Budgeting Helps You Be Prepared

It's easy to feel like a car comes with a lot of costs beyond the sticker price. However, these costs won't be a surprise if you plan around them and save and budget accordingly. Making a plan for calculating the full cost of your car can help you identify what kind of vehicle you want to buy and realistically estimate your budget.

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Laura Leavitt
I love a good spreadsheet and will happily calculate compound interest all day, but my biggest focus is helping people achieve their financial goals. That could be saving up for a dream car or calculating the right car payment for your budget so you can get a reliable daily driver. I research and write about personal finance so that making great financial choices becomes easier for us all.