The True Cost of Owning a Car in California
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Recent data from AAA posts the average cost to own a car in California at $12,182 per year, which factors in the cost of fuel, maintenance, insurance, depreciation and more. When looking at ownership costs across the nation, Californians’ car ownership costs are above average.
Keep reading to learn more about the hidden costs that go into owning a car in California and tips for saving money on auto insurance coverage.
Key Takeaways
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What Is the Average Cost To Own a Vehicle in California?
Drivers in California pay $1,015 per month in fuel, maintenance, insurance, depreciation and other costs related to owning a new vehicle. This is a 12% increase from 2022 and the reason for this price hike can be attributed to a few reasons, including cars depreciating more quickly, global supply chain issues, limited car inventory and car prices going up.[1]
Let’s delve into the various costs that go into owning a car.
Average Car Loan Interest Rates in California
As of the third quarter of 2023, the average auto loan interest rates were 7.03% for a new car and 11.35% for a used car.[2] Based on these rates and depending on whether you buy a new car ($48,247 on average) or used car ($26,091), you may be paying $6,575.82 to $7,291.91 in interest over the life of a 60-month term with 20% down.[3][4] If split evenly over five years, that's paying about $1,450 in interest each year.
Car Price |
Interest Rate |
Total Interest With 20% Down |
---|---|---|
$48,247 (New) |
7.03% |
$7,291.91 |
$26,091 (Used) |
11.35% |
$6,575.82 |
Keep in mind that credit score can affect your interest rates and having good credit can help you lock in a lower rate.
Average Car Repair Costs in California
The average annual cost for automotive repair in California sits at approximately $416. This figure takes into account both labor and parts costs, with labor costing around $145 and parts averaging $271.[5] It's important to note that these costs can vary depending on the specific maintenance needed and the vehicle’s year, make and model.
Average Cost of Gas in California
The average cost of regular gas is $4.65 per gallon as of February 20, 2024.[6] Considering that the average small car holds about 12 gallons of gas and assuming you fill up your tank from empty to full twice a month, Californians are looking at an average cost of around $1,339.20 per year for fuel.[7]
Average License Plate and Registration Fees
In California, it costs $74 to register your vehicle or renew its registration. Other fees may apply as well, such as a $20 fee for your smog abatement and $27 to replace your license plate. In addition, California drivers are required to pay fees based on their vehicle’s value. For example, if you bought a new car valued at $48,247, the transportation improvement fee and vehicle license fee alone would set you back $507.61.[8]
Below, we’ve outlined some of the fees you will be required to pay to the California DMV:
Type of Fee |
Cost |
---|---|
Registration/Renewal |
$74 |
California Highway Patrol Fee |
$32 |
Alternative Fuel/Technology Smog |
$8 |
Smog Abatement |
$20 |
Road Improvement Fee (RIF) |
$118 |
Transportation Improvement Fee |
$32 to $227 depending on vehicle value |
Vehicle License Fee |
0.65% of purchase price or vehicle value |
Average Cost of Car Insurance in California
For a 35-year-old driver with a clean driving record in California, it costs $1,659 per year on average for full coverage or $506 per year for minimum liability coverage.[9] If you’ve finished paying off your car, you can opt for minimum liability insurance to save money but you will not be insured for physical damages to your car.
California Toll Roads
The cost of toll roads in California varies depending on the specific road, the distance traveled and the vehicle type. For example, the toll roads operated by the Transportation Corridor Agencies (TCA) in Orange County, which include state routes 73, 133, 241 and 261, collect tolls electronically and offer various payment methods, such as FasTrak accounts and online payments for visitors or infrequent users.[10] Drivers may face toll rates ranging from $1.73 to $18.36 depending on the toll road, with Prepaid FasTrak account holders earning a discounted rate.[11]
California Car Taxes
The standard sales tax rate for vehicle purchases in California is 7.25%, which includes state and local taxes. However, the total tax rate can vary depending on additional local taxes, which might raise the overall tax rate, with rates in some cities ranging from 0.125% to 1.50%.[12][13]
Depreciation
Unfortunately, cars depreciate quickly with your vehicle potentially taking a 20% depreciation hit after the first year. After five years, your car may be worth only 40% of what you bought it for.[14] To put it into perspective, if you bought your car for $40,000, it would be worth only $32,000 after one year and worth $16,000 after five.
How To Save Money on Car Insurance in California
While certain costs may be out of your control, such as your registration and renewal fees or fuel, there are steps you can take to lower the cost of your auto insurance. One of the simplest ways of saving on auto insurance in California is to ask your carrier about available discounts. Your insurer might offer a discount for maintaining a clean driving record, bundling your home and auto insurance, completing a defensive driving course or even earning good grades.
You can also shop around for better pricing through different providers. Of course, you don't want to get bogged down by providing your vehicle information, claims history, date of birth and other details each time you contact an insurance carrier. It's better to let SmartFinancial do the heavy lifting. Just complete one questionnaire about your coverage needs and budget to get matched with an auto policy.
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