The True Cost of Owning a Car in California

The average annual cost of owning a car in California is approximately $14,390 as of 2023, which includes the expenses of fuel, maintenance, insurance, depreciation and other related costs. When looking at ownership costs across the nation, Californians’ car ownership costs are above the national 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.

What Is the Average Cost To Own a Vehicle in California?

Drivers in California pay about $1,199 per month in fuel, maintenance, insurance, depreciation and other costs related to owning a new vehicle, as of 2023. This is 18% more than the national average.^[1]

Thankfully, the cost of ownership hasn’t increased significantly since 2023, as car ownership costs saw a marginal increase of less than 1% nationwide in 2024, largely due to more prominent depreciation from increased car prices and their associated higher costs for financing.^[1][2]

Below, we’ll delve into the various costs that go into owning a car.

Average Car Loan Interest Rates in California

As of 2025, the average auto loan interest rates were 8.64% for a new car and 13.40% for a used car.^[3] Based on these rates and depending on whether you buy a new car ($49,740 on average) or a used car ($25,565 on average), you may be paying $7,720.66 to $9,352.88 in interest over the life of a 60-month term with 20% down.^[4][5] If split evenly over five years, that's paying up to about $1,871 in interest each year on average.

Keep in mind that your credit score can affect your interest rates, with good credit potentially helping you lock in a lower rate.

Average Car Repair Costs in California

The average annual cost for automotive repair in the western part of the United States, which includes California, is $429.69 as of 2024. This figure takes into account both labor and parts costs, with labor costing around $145 on average and parts averaging about $285.^[6] It's essential to note that these costs can vary depending on the specific maintenance required and the vehicle’s year, make and model.

Average Cost of Gas in California

The average cost of regular gas is $4.73 per gallon as of June 2025, higher than the national average of $3.15.^[7] 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 annual fuel cost of around $1,362.24.^[8]

Average License Plate and Registration Fees

In California, the cost to register or renew a vehicle is $74. Other fees may apply as well, such as a $20 fee for your smog abatement and a $27 fee 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 $49,740, the transportation improvement fee and vehicle license fee alone would set you back $517.31.^[9]

Below, we’ve outlined some of the fees you will be required to pay to the California DMV:^[9]

Average Cost of Car Insurance in California

In California, the average annual cost of full coverage is $3,100, while minimum liability coverage costs $911 per year.^[10] 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 damage 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.^[11]

California drivers may face toll rates ranging from $1.76 to $18.72, depending on the toll road, with Prepaid FasTrak account holders earning a discounted rate.^[12]

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 may increase the overall tax rate. For example, the rates in some cities range from 0.1% to 2%.^[13][14]

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.^[15] For example, if you bought your car for $40,000, it would be worth only $32,000 after one year and $16,000 after five years.

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. Complete a brief questionnaire about your coverage needs and budget to get matched with an auto policy.