The True Cost of Owning a Car in California

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Many Californians realize that owning a car is one of the best ways to explore their home state's fantastic cultural destinations. Owning a car allows for exciting road trips to Lake Tahoe, Sequoia National Park, Pier 99 and Route 66. It makes it easy to visit beautiful natural settings like Laguna Beach, the Sierra Nevada Mountains and Yosemite National Park.

California is the state with the highest rate of car ownership in the nation. According to Statista, almost 14.8 million Californians own vehicles. These vehicles come with a hefty price tag. The average cost of owning a car is $14,571 according to a U.S. News and World Report study. 

In this article, we're going to talk about car ownership costs in the Golden State. A car purchase and payment are not your only expenses for owning a car. You'll learn about the following topics:

Do you need to lower car ownership costs? Comparing insurance rates is a good place to start cutting expenses. Shopping for car insurance can reduce the amount you spend on insurance each year. Whether you have a new car or a jalopy, SmartFinancial has insurance comparison tools that can help you save money on your auto coverage. Just enter your zip code on this page to get started for free.

The True Cost of Owning a Vehicle in California

California's car buyers outshine the competition across the nation. The Golden State ranks first in U.S. auto sales. In 2018, the state's car dealers sold a total of 896,007 personal cars. In 2020, vehicle sales dropped everywhere due to the pandemic.

According to AAA, the average cost of owning a car can cost you $10,773 on average per year. It typically costs $6,354 for a small sedan and $10,054 for a pickup truck.

In California, these costs are much higher than the rest of the nation. These include the following prices:

  • Insurance – Nationwide, the average cost for insurance is $1,824.
  • Maintenance Costs – The average price for car maintenance is $1,186.
  • Gas – The annual cost for gas is $7,929 for fuel, assuming a person drives 10,000 miles per year

You should also consider parking costs.

Financing Costs: The Cost of Owning a Car

When shopping for your new car, you shouldn't visit a dealership empty-handed. Consider getting pre-approved for a car loan from your bank, credit union or online lender. Any financial information you give to these entities to secure a loan is protected by privacy rights.

Most people pay higher interest rates based on their credit. A pre-approved loan will alert you to any credit issues and give you a chance to address them. You can build up your score by asking for access to your credit report to see what it contains. You can contest bad information, like erroneous charges from credit cards, and ask them to be removed from your report.  

A pre-approved loan also puts you in a better bargaining position with the dealership. If you get approved for a loan at five percent, you may be able to negotiate a lower rate with the dealer.

Do research online if you're trading in an older model car or searching for a used one. You can search using Kelley Blue Book, NADA, and Edmunds to price your car. Carvana and CarMax will give you actual offers. These places will also write a check.

Taxes are another cost you will have to pay in the state. According to the U.S. News and World Report, the average taxes for automobiles in California are $3,313.

Once you get approved for a car loan, shop for a model that you can afford to maintain. Consider how much it will cost to insure your car. Additionally, research how much it will cost to maintain your vehicle. This includes paying for routine maintenance costs, gas, toll fees you'll pay on the road.

How Much Financing Charges on Your Loan Costs You

Do you have a loan or lease on your car? Another thing you'll have to think about are interest rates. 

The interest rates on car loans will determine how much you'll pay each month on your car payments. You'll have lower monthly installments if your finance costs and interest rates are lower. Making a larger down payment can also lower your finance charges.

At this time, the average interest rates for a 60-month and 48-month car loan average is 4.1 percent. The price for a 36-month used car loan is 4.4 percent.

How Depreciation Affects Your Car

Another hidden cost that you pay for is your vehicle's depreciation. Car depreciation refers to the rate an auto loses its value from the first year you bought it.

Most automobiles start losing their value within the first year of ownership. A new car loses about 20 to 30 percent of its value in the first year. Its value drops another 15 to 18 percent in the following 5 years.

Car owners can use Kelley Blue Book or to find out about your vehicle's resale value. You can also use car shopping tools like Carvana or Vroom to get a cash offer and compare it to your car's original sticker price.

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The Average Cost of Car Insurance in California

Have you recently purchased a car? If so, you'll need an affordable insurance policy to protect your vehicle. California requires car owners to become financially responsible before they head out on I-5 and other highways.

SmartFinancial used in-house data to calculate the average price of car insurance premiums in California. According to our data, the average premium in the Golden State is $159.

 In the Golden State, drivers must carry the minimum amount of liability coverage to pay for accidents they may cause.

Required Coverage

  • $15,000 bodily injury coverage per person
  • $30,000 bodily injury coverage per accident (this is the maximum payment for all injuries that you cause in an accident when more than one person receives injuries)
  • $5,000 property damage per accident. It is the maximum payment for property damage in an accident you cause).

If you're at fault in an accident, liability coverage pays for another driver's car damages and medical expenses. It won't pay for the damages to your car.

Additional Coverage

You should consider collision and comprehensive insurance for additional protection. This insurance is mandatory from lenders when you lease or finance a car.

  • Collision Insurance pays for damages that your vehicle may receive in a collision-related accident, whether or not you're at fault. It includes
  • Comprehensive Insurance pays to replace a covered car that's stolen or damaged in an incident that's not related to a collision. It includes natural disasters, storm damage, falling objects and hitting animals.

Other coverages include medical payments, personal injury protection, uninsured/underinsured motorist. Visit this page for more information about California's minimum insurance coverage requirements.

Cheapest Car Insurance Rates in California

Car insurance companies in California analyze several metrics when calculating your insurance rate. These include the state's requirements, your age, zip code, driving history and other variables.

The insurer that provided the lowest rates was Esurance at $144.05. Allied was the carrier with the highest rates at $282.17. Other cheap insurance companies include:

Insurance Company Average Monthly Rate
Esurance $144.05/month
Unitrin $162.51/month
USAA $163.84/month
Mercury $174.68/month
Allstate $178.97/month
21st Century $181.09/month
California Capital $184.57/month
SAFECO $187.49/month
Grange $192.69/month
CSAA $193.80/month

Cheapest Cities for Car Insurance In California 

According to SmartFinancial, here are the 10 cheapest cities for car insurance in California.

City Monthly Premium
Anderson, CA $86.23/month
Oroville, CA $92.29/month
Grass Valley, CA $93.72/month
Redding, CA $93.78/month
Red Bluff, CA $96.71/month
Olivehurst, CA $99.91/month
Lompoc, CA $101.21/month
Yucca Valley, CA $101.56/month
San Ysidro, CA $101.98/month
Eureka, CA $103.98/month

Are you a California resident who needs more affordable car insurance? Consider shopping around to find the lowest rates possible. SmartFinancial has an insurance comparison service that can help you find the cheapest rates possible. Our online tools can save you up to 40 percent on your car insurance rates. 

California Insurers Can't Use Your Credit Score to Determine Your Premiums

Your credit score can make the difference between paying thousands of dollars more in premium rates. In most states, it is legal for insurers to use credit-based insurance scores as part of their underwriting process.

Car insurance carriers charge higher premiums if a person has a poor credit score, and they offer discounted rates when a driver's credit score is great.

Golden State residents are lucky to live in one of the few states that don't allow insurers to use credit scores to determine their premiums. California's Senate passed SB 691 which had a key provision prohibiting insurers from discriminating against consumers who have less-than-perfect scores.

How Much Are Title and Registration Fees in California?

Once you buy your car and sign up for an insurance policy, the state will require you to pay additional fees.

The state imposes extra fees to register your car. If you're buying a used car, you'll also have to visit California's DMV to transfer the title into your name. Additionally, you'll have to register the car in your name. To register your car, you must bring proof of coverage.

The Golden State requires drivers to pay the following fees when registering their cars for on-highway use. According to California's Department of Motor Vehicles, these fees include:

  • Registration Fee ($64) – A vehicle registration fee ties a car to its owner. Like other states, California requires you to register your car with the state's Department of Motor Vehicles (DMV).
  • California Highway Patrol (CHP) Fee ($28) – This fee helps support the CHP department.
  • Vehicle License Fee (0.65 percent of the purchase price/value of a car) - California requires most car owners to pay a vehicle license fee, instead of including the fee in your property taxes. It includes disabled veterans, nonresident military personnel stationed in the state, Native Americans, specialized vehicle owners and historical car owners who don't have to pay the VLF. You can use California's online calculator to determine your VLF.
  • Transportation Improvement Fee ($27-$192) – California uses TIF fees to repair bridges, roads, and maintenance of highways and streets. This fee affects the original vehicle registration (VR), transfers and renewals. Fees range from $27 - $192 depending on the value of your car.
  • County/District Fee – California counties impose separate fees on drivers. They are set by the county or district where you reside.

California provides registration fee calculators that can help you determine your registration fees for:

For a full list of registration fees for vehicles, visit the Department of Motor Vehicles page here.

Drivers in California Can Save up to 50%

Average Fuel Costs in California

Along California's winding highways, you need enough fuel to travel to visit different cities or beachside destinations along the Pacific coast.

According to the AAA, the national average gas cost is $3.03. California has the nation's most expensive gas prices at $4.12 per gallon.

How will it cost to fill up the gas tank of your car? Here are some price estimates for different cars based on a 52-week year and one fuel fill-up per week.

Auto Size Gas Tank Size Average Cost to Fill Tank Annual Cost
Small Cars 12 Gallons $49 $2,597
Large Cars 15-16 Gallons $65 $3,380
Truck 25 Gallons $103 $5,356
Motorcycle 5 Gallons $20 $1,040

Average prices may vary throughout the year depending on the cost of fuel. The current sky-high prices are due to the Golden State's large population and the end of strict, stay-at-home orders. Since more Californians are commuting, it has placed an increased demand on the region's fuel supply.

Last year, the Golden State had an average gas cost of $2.76 per gallon. Residents paid lower prices because of the lower demand for gas because of the pandemic lockdown.

In a normal year, Californians typically travel almost 14,435 miles annually. The average mileage for a vehicle is 24.9 miles per gallon of fuel. Golden State residents spend around 16 cents of gasoline per mile, totaling about $2,309.60 in travel expenses each year.

For more information about fuel cost updates in your area, visit GasBuddy's California Gas Prices site.

The Average Price of Maintenance and Repairs in California

Routine maintenance is essential to keep your car running smoothly. According to the AAA, a new car's routine maintenance and repairs cost $0.09 cents per mile.

Californians may spend a little more money compared to other Americans to maintain their vehicle. Here is an annual service schedule to perform maintenance checks on your car. 

Change your oil

Getting an oil change removes excess sludge from and extends the life of your engine. It also protects your vehicle's parts and helps you get better mileage. Changing your car's oil also keeps it running well. You should do this every 5,000 to 7,500 miles. The optimal benchmark is 3,000 miles. According to Kelley Blue Book, the average cost to change your oil is between $35 to $75 for conventional oil and $65 to $125 for the annual price of synthetic oil.

Check your engine fluids

Popular Mechanics recommends that car owners should get their engine fluids checked regularly. People who don't check their fluids could reduce their vehicle's power, gas mileage and resell value. Six engine fluids you should routinely check include your engine oil, coolant, power steering fluid, brake fluid and transmission fluid. Additionally, have your filter replaced and the pan cleaned every time you change fluids. The annual maintenance costs for these services vary between $80 to $250. 

Test your lights

Have an expert inspect the bulbs on your car to make sure these devices work properly, along with your fuses. The lights you should get checked include your headlights, tail lights, indicator lights, and number plate bulbs. Ensuring your lights work properly will help you avoid getting ticketed or paying fines. Mechanics check your lights as part of a standard inspection, which costs anywhere from $150 to $250.

Schedule a tire rotation

Tires worn to a tread depth of 4/32 inches may increase your stopping distance in wet conditions by 87 feet according to AAA. During a tire rotation, your mechanic will change the position of every tire on your car. Most manufacturers recommend that your tires rotated every 5,000 miles. It may cost between $20 to $45, depending on the facility. Some repair shops will do it for free. Replacing your tires can cost between $400 and $1,800.

Get a checkup

Your mechanic can test your On-board Diagnostics Port (OBD-II) to ensure it's working fine. Additionally, if you see the check engine light, take your vehicle to the repair shop to diagnose the issue.

Get an annual brake pad inspection

You should set a schedule to have your brake pad inspected. If you notice any vibrations or shuddering from your pedals, take your vehicle to a service center to get your brakes checked out. Changing out your brake pads will depend on how much you drive. People who use their car more will need to change their brake pads more than rural drivers. The charges depend on your location in California. It may cost you between $35 to $200 to change out brake pads for all four wheels, plus labor costs. The total per axle can cost between $115 to $270.

Ensure your belts and hoses perform well

Your belts are essential to your vehicle's on-the-road performance. Get them checked. If they're in excellent condition, you don't need to replace them.

Review your car insurance

It's a good idea to review your car insurance every year to ensure it provides you with enough coverage and still fits your needs. Additionally, there may be some policies you may need to drop or change.

Windshield wipers replacement

Get new windshield wipers for your car every six to 12 months. Wiper replacements cost under $85 for labor. It only costs $25 if you install the parts yourself.

New battery

You should replace your car battery every three years, especially if your car stays in hot conditions year-round. Replacing your battery may cost between $60 and $200, depending on your vehicle's type and model.

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Average Car Repair Costs of Check Engine Alerts

CarMD conducted its 10th annual state ranking of repairs related to check engine warnings. 

According to its 2020 State Repair Cost Ranking Study, California drivers paid the most money in the nation for repairs. Most Golden State drivers paid an average of $414.24. The average costs for Golden State are $147.38 for labor and $266.86 for parts.

The Cost of Access: Using California's Toll Roads

Other driving costs you may have to pay as a California resident are tolls. According to Caltrans, several bridges and highways collect tolls in the state. Drivers can use FasTrak on all toll roads and bridges, including the Southbay Expressway but they must have a pass that gives permission, otherwise, they can be fined. Toll roads in California include:

  • Golden Gate Bridge – Southbound Direction into San Francisco has toll fees.
  • Bay Area Bridge – The Bay Area Toll Authority collects this fee.
  • Orange County Toll Roads – These roads include 73, 133, 241 and 261.
  • San Diego "Southbay Expressway" – Drivers may pay a fee to use this private, 10-mile toll road. It was constructed from SR-54 in Spring valley to Otay Mesa Road/SR-905 in Otay Mesa near the Mexican border. It will operate for 35 years before the state takes ownership.

Comparing Cents Per Mile: Is it Cheaper to Use a Rideshare Service or Use My Car?

Rocket HQ compared how much the average costs of owning a car compared to using an Uber. According to the company, the average Uber price added up to $0.80 cents per mile.

If you travel 10,000 miles per year, it means you would pay almost $8,000 to use an Uber. It makes the average cost slightly cheaper than owning a car. This cost does not include the $2.80 booking fee.

Lyft usage is also slightly lower than owning a car. The cost of using a Lyft is around $1 per mile (or 100 cents per mile). It does not account for the service's minimum costs. After totaling all fares, the price is $10,000, which is cheaper than the national average of $10,773.

Tips to Save Money on Your Auto Insurance Costs in California

Car insurance rates within the Golden State are higher than in many places in the nation. You can save money with your insurance company by using available discounts. Here are a few cost-cutting measures that can save you money::

  • Join Telematic Programs – A few carriers, like Allstate, have created programs that reward drivers that practice safe driving habits. Some provide incentives like discounted premiums or cashback rewards every six months.
  • Bundle Your Car Insurance Policies – Another way you can slash prices on your rates is to package your policies together. You may save up to 20 percent on your car insurance rates.
  • Defensive Driving Course – Your insurance carrier may lower your rates if you take classes that teach you to practice safe driving behaviors.
  • Hybrid/EV – Your insurer may decrease your premium if you own an eco-friendly car like a hybrid or electric car.
  • Safety Equipment – Do you have a car alarm or anti-theft device installed in your car? A few carriers provide discounts on Comprehensive coverage when your car has these features.
  • Seek Discounts from Your Insurer – Ask your insurance company if you qualify for one of their discounts. They can help you save money on your premiums.

Get Cheaper Premiums in California

Are you a Golden State resident who needs a cheaper car insurance premium? SmartFinancial has an online comparison service that can help you find the lowest rates. Just enter your zip code to get started. Our tools will send you quotes from local insurance companies within your area. It's a smart and simple way to find affordable coverage. We can save you up to 40 percent on your premiums.

Get a Free Auto Insurance Quote Online Now.