The total cost of owning a car might be more than you think

The average price of a new car in America tops $33,000, according to car-buying site Kelley Blue Book, so buying a vehicle is a major financial move. While many consumers focus on sticker price or the monthly payment, that overlooks many other costs.

You have license fees, registration fees and taxes. You need to buy insurance, fill the gas tank, go in for regular maintenance. And your car loses value from depreciation every day you own it.

To help you understand the total cost of owning a car and figure out what you can afford, let’s take a look at these factors:

• What is the real cost of owning a car?
• What goes into the total cost of ownership?
• How can you compare costs for various models, including the “five-year cost”?

What is the real cost of owning a car?

The average monthly loan payment for new cars in the fourth quarter of 2014 was $482, according to researcher Experian Automotive. But that $482 isn’t the whole cost to own that car — far from it.

For an average vehicle that’s driven 15,000 miles a year, all costs of ownership added up to $8,698 a year, according to AAA’s 2015 Your Driving Costs study. That’s about $725 a month.

Costs vary by type of vehicle. Small sedans had an average annual cost of $6,729, or $561 a month, while a four-wheel-drive SUV cost $10,624, or $885 a month, according to AAA. So the SUV would cost you 58% more on an ongoing basis.

What goes into the total cost of ownership?

The real cost of owning and operating a vehicle includes:

• Fuel
• Tires
• Maintenance and repairs
• Taxes, license and registration fees
• Insurance premiums
• Depreciation
• Interest/financing

Fuel: Do you use regular or premium gasoline? What kind of mileage does the car get? Average fuel costs were $1,682 per year, according to AAA.

But what you’ll pay depends on the car you drive. Over five years, a family could spend $18,000 to fuel an SUV, compared to only $11,000 for a large sedan, according to Edmunds.com data.

Tires: Tires are easily overlooked — until you need a new set. AAA estimates the average cost of tires at $147 a year. Tires with a 60,000-mile warranty will need to be replaced about every four years if you’re driving 15,000 miles a year. In addition to paying several hundred dollars for the tires, you’ll also pay installation costs of $60 to $100 or more.

Maintenance and repairs: How much will it cost for the scheduled maintenance recommended by the manufacturer, including oil changes, tire rotations, battery inspection and testing? What type of repairs will be needed, and how much will they cost? Total costs averaged $767 per year, the AAA study found.

Taxes and fees: This category includes state and local taxes, license, title and registration fees, and other fees. Nationally, they averaged $665 a year, according to AAA.

Insurance: Insurers consider price, safety, risk profiles and more when setting premiums.For example, family-friendly minivans, which typically come with many safety features and are likely to have children as passengers, are cheaper to insure than high-end sports cars that are fast and expensive to repair, according to the Insurance Information Institute. Insurance rates vary from state to state, as well. You can preview rates in your area usingNerdWallet’s auto insurance comparison tool.

Depreciation: How much value the car loses each year is the single largest ownership expense, according to AAA. New cars can lose over 20 percent of their value in the first year, according to Edmunds.

Used car prices are influenced by supply and demand, so they’ll depreciate more quickly if the market is flooded with used and off-lease cars for sale. Some models are known for holding their value over time, so look up the estimated depreciation of the cars you are considering on Edmunds or Kelley Blue Book websites. If a certain car loses value rapidly at a specific point, say, in the third year, you might consider selling it before it hits that cliff.

Interest/financing: The interest rate and the length of your car loan affect your total cost of financing. Loans for new cars have been getting longer, with six and even seven years being popular lately, and the average length is now a record 67.2 months. The average interest rate was 4.56% for new car loans, according to Experian’s study in late 2014.

How can you compare total costs for various models, including the ‘five-year cost’?

Once you’ve narrowed down your choices to a few models in your price range, you’ll need to figure out which will cost less over time. And you’ll want to know which car will better hold its value, too.

Analysts talk about a car’s “five-year cost to own.” This estimate looks at fuel, maintenance and other costs, as well as how much the car is likely to depreciate over five years. This metric can be a handy way to compare cars. Sometimes a car with a cheaper sticker price actually costs more to own in the long run.

Car sites such as Edmunds and Kelley Blue Book feature five-year cost of ownership tools that allow you to look up specific models to find their estimated operating costs, including depreciation.

Each site uses uses its own proprietary data and methodology, so check a few. For example, KBB.com uses the price of a car’s five-year extended warranty as a way to project repair costs. And Edmunds.com includes another factor: federal tax credits that might be available for alternative-fuel vehicles, which can be worth up to $7,500. For example, purchasing a Toyota Prius Plug-in Hybrid might make you eligible for a federal tax credit of $2,500.

The bottom line

When you’re comparing cars you like, go beyond sticker price and monthly payment. Make sure you research the ongoing costs of driving and maintaining each model, so you’ll get a true understanding of affordability. A realistic estimate of a vehicle’s total cost of ownership is crucial in helping you choose a car that fits your budget.

Jeanne Lee is a staff writer at NerdWallet, a personal finance website.