You’ve purchased your first new car in years, and you’re overjoyed because it’s exactly what you wanted and needed. You’ve researched numerous makes and models, and you’ve whittled it down to the one vehicle that suits your lifestyle, space needs, driving habits, and your style preferences. The monthly payments fit within your budget of no more than 10 percent of your monthly take-home pay, and you were able to get financing with a very reasonable interest rate. But six months into your new car purchase, you’re having trouble with car expenses. There seem to be a number of things you forgot to factor in. Will you be able to maintain your costs and payments? Here is a comprehensive list of every car expense you need to take into account before taking the plunge and buying.

Fees at the Dealership

Many car shoppers only think about what the monthly payment is and whether or not they can afford it. This also explains why the average new car loan is now about 70 months, according to NerdWallet. Some car buyers only take the Manufacturer’s Suggested Retail Price (MSRP) plus the destination charge, which can be anywhere between $800 and $1,500. That does not equate to what’s known as the Out-the-Door price (OTD). If you add everything in, the actual purchase price of the car could be thousands more than the sticker price. The OTD price may include some, if not all of the following:

  • Down Payment: 20 percent of the vehicle purchase price is recommended. A $40,000 car means an $8,000 down payment.
  • Sales tax: Typically between 5 and 10 percent of the sales price, and may also include state, county, and local taxes.
  • Registration fees: Estimate these fees by checking your locale’s Department of Motorized Vehicles (DMV) site. This includes title, registration, and license plates. Some dealerships automatically provide this service and mark it up.
  • Documentation fee: Typically between $80 to $1,000, depending on the state where you buy. This is usually not negotiable.
  • Advertising Fee: Some dealerships will pass on their cost of marketing and advertising to the customer.
  • Extended Warranty: If you choose to get an extended warranty, the dealership will add it to the monthly loan price (if you finance with them). Unless you pay for the extended warranty in full, it drives up the monthly payment amount.
  • Dealer Markup or Additions: Make sure you know everything that’s been added to the price of your car when you pay for it. Dealers can add equipment, obscure fees, or outright mark up the price on top of the sticker price.

Gas and Insurance

Gas prices are fickle, but there’s no question that it’s not cheap to fill your tank. Right now, prices are pretty high across the nation, and you need to plan for that weekly expense. The average price of gas right now is just over $3.45 a gallon for regular unleaded. If you fill up a 14-gallon tank every week, expect to spend about $193 a month on gas. Even if you have an electric vehicle, a full charge costs an average of $12.32 each time you charge up, according to Kelly Blue Book, which amounts to about $50 per month. It’s quite a bit less than gas, but it’s still an amount you should budget for because it’s $600 per year, and that’s probably at the low end.

Car insurance is one of those expenses people don’t think about much, but legally every driver is required to have it in 48 states. As of July 2024, the only two states that don’t require car insurance are New Hampshire and Virginia. If you’re required to have it in your state and it’s discovered you don’t have an active policy, you may get fined, lose your driver’s license, and even have your registration revoked by the state while still being financially liable for damages. If you’re thinking about trying to duck the law to save money, it could end up much worse for you. So, make sure you have an active auto insurance policy from a reputable company and budget for it.

According to CNN, car insurance rates are up almost 21% from February of 2023 to February of 2024, as provided by the Consumer Price Index data. In the United States, current car insurance prices for full coverage (collision, comprehensive, liability) cost an average of $223 per month or $2,681 per year, according to MarketWatch. Even if you only get minimum coverage (liability-only), it costs an average of $72 per month or $869 per year. Regardless of what type of coverage you choose, these are costs that should be factored into your monthly budget so that you have enough to cover the insurance bill, whether you pay monthly, every six months, or annually.

What Isn’t Covered by Your Car’s Manufacturer Warranty?

Just because your new car comes with a manufacturer's warranty, you shouldn’t assume that everything about the car is covered. That’s a huge mistake and completely false. Some car buyers don’t even read the fine print to educate themselves on what the warranty will actually cover if something goes wrong with the car. Here are a couple of major warranties explained so you understand what is typically covered.

Powertrain Warranty
A powertrain is, essentially, what moves the car and includes the engine, transmission, and drivetrain (driveshaft, CV joints, U-joint, axles, differential, wheels). Any damage incurred during normal use or due to manufacturer defects is covered. Powertrain warranties are typically quite a bit longer in duration than limited warranties. On average, manufacturers provide 5 years or 60,000 miles of coverage (whichever comes first). Some, are longer (10 years, 100,000 miles).

Bumper-to-Bumper Warranty
The bumper-to-bumper warranty sounds like it covers everything. It does not. It’s also known as a basic limited warranty, which is more accurate. It covers the engine, transmission, differentials, drive axles, brake systems (not rotors or pads), electrical systems, suspension, steering, and HVAC. These warranties last about 3 years or 36,000 miles on average, depending on the manufacturer. Some manufacturers like Kia and Hyundai, offer 5 years or 50,000 miles, much higher than the industry standard.

There are costs you will have to take care of yourself that are completely outside of the scope of any manufacturer warranty, so be aware that normal driving will result in wear and tear. You may also have unplanned damage from the environment or other drivers. Manufacturer warranties (powertrain or limited/bumper-to-bumper) will not cover the following areas:

  • Routine maintenance: Oil changes, tire rotations/alignment, spark plugs, oil/air/cabin filter changes.
  • Normal wear and tear: tires, brake pads, brake rotors, wiper blades, light bulbs.
  • Damage from outside occurrences: dings, dents, accidents, natural disasters, or severe weather (e.g., tree branch falls on your car, hail damage, etc.)
  • Racing: you abuse your car by street or track racing and the warranty is voided.
  • Modifications: aftermarket parts or changes made to your car void the warranty.

What Does Everything Really Cost?

As you can see, you should not simply budget for the MSRP and destination charge of the car, nor just the out-the-door purchase price of the car. There’s so much more to factor in even during just the first year of ownership. On top of a monthly car payment that includes sales tax, interest, tax/tags/title/registration, documentation fees, etc., you have to add insurance, maintenance/wear and tear, and gas/charging costs. Expect at least an additional $300-$400 per month on top of what that monthly car payment costs. If that’s quite a bit more than you budgeted, it’s time to go back and crunch the numbers. You may have to choose a vehicle that costs less.

Our recommendation would not be to get a longer loan term to keep your loan payments lower. That would mean you would pay more in interest, and it’s safe to say you would be upside down on your car loan, which means that your car would depreciate to the point where you owed more on your loan than the car is worth. Here’s a breakdown of what a 2024 Mazda CX-50 2.5 Premium Plus AWD might cost.

  • Sticker Price: $45,270 (incl. $1,375 delivery, processing, and handling fee)
  • Sales Tax: $3,282 (7.25% in Illinois)
  • Down Payment: $9,700 (20%)
  • Financed Amount: $38,852
  • Loan Interest Rate: 3.0%
  • Registration/title/license plates: $400 ($33/month)
  • Monthly Payment: $698 for 60 months
  • Average Monthly Gas Costs (1,000 miles/month): $160/month
  • Average Insurance Costs (Comprehensive Coverage): $223/month
  • First Year Maintenance Costs: $750 ($62/month)
  • Total Monthly Cost: $1,143 ($13,716 per year)