The true cost of car ownership is much worse than most people think, here is why

Many drivers underestimate how expensive owning a car really is. A detailed cost breakdown sparked a wave of reactions and a hard look at the hidden expenses.

A lot of people still assume car ownership is just an essential part of adult life, something you accept without thinking too much about the long-term cost. One woman shared her experience, explaining how much money she lost on a car she barely needed, and the responses sparked a conversation about how Americans often carry expenses they don’t benefit from.

Even though the cost dropped in 2025 due to lower finance and average fuel costs, car ownership remains one of the most significant expenses in the United States. On average, a person still spends almost $12,000 a year on just one vehicle. To better understand the amount we are talking about, for this price, it is still possible to rent a studio in many US cities.

The story

The woman explained on Reddit that she bought a 2012 Prius in 2022 for $21,000 when prices were still inflated after COVID, so that was considered normal at the time. But once she moved to a walkable part of Seattle, she started noticing she didn’t need the car as much. Groceries, entertainment, shopping, and even the places she went out to were all close enough to reach on foot. The car mostly sat in the garage, except for occasional trips she could have handled with rentals or car-sharing.

Her costs over two years included insurance, parking, repairs, registration, tires, and routine service. Once the market stabilized, the car’s value dropped to around $4,000. It means she lost about $17,000 in depreciation plus the expenses. Overall, she said she would not have bought a car at all if she had understood how little she would use it.

She also shared that over the last two years, she spent around:

• $4000 on auto insurance
• $2400 a year for a parking spot
• $500 on oil changes
• $1000+ in repairs
• $500 for new tires
• $400 for registration/tabs

Her post sparked reactions from people who had similar experiences or had re-evaluated the cost of owning a car after adding up the numbers themselves.

The reactions

Many people recognized that the car isn’t the problem by itself, but the fixed expenses that follow it. Others explained how they changed their habits and how those changes affected their budget and routine.

One person shared a similar experience, “This is why I ditched my car. I owned it, but was still paying $200 a month just for parking and insurance. One day, my battery died, so I just donated it and canceled my insurance. Sure, life is less convenient now, but having $200 every month is pretty nice.”

Even if you’re barely driving, you still have to pay for insurance, and in many cities, you may also pay to park the car. For people who already live near transit hubs or basic services, dropping those recurring bills gives them more room in their budget than keeping a car they rarely use.

Others also agreed with the poster, saying, “I agree that car ownership is super pricey, living in SC, I finally had to buy myself my first car, a low mileage 2012 Prius was 10k, parking is 400/yr, and like 700 for registration. Oil changes for $500 seem crazy to me; learn to change your oil.”

In the U.S., many areas lack transit or walkable options, so having a car is not optional. In those situations, the only way to keep costs down is to handle basic tasks yourself. Changing oil, air filters, and fixing simple parts at home can cut expenses and keep the yearly total within a budget. 

Another person was curious about the high insurance cost the poster paid, “What kind of coverage do you have? Have you shopped that rate against multiple insurance companies? I don’t live in Seattle, but I have full coverage on two cars that are 6-7 years old and have paid less than that.”

Insurance costs vary widely between states and even ZIP codes. Many drivers stay with the same company for years without comparing prices, which can lead to higher bills. Reviewing coverage regularly and comparing quotes can prevent overpaying, though it doesn’t address larger expenses like depreciation or long-term upkeep.

How to calculate the cost of ownership

Calculating a vehicle’s total cost of ownership (TCO) means looking far beyond the sticker price and adding up every expense you incur from the day you buy the car until the day you sell it. Many websites offer free calculators, but here is how you can calculate a car’s cost of ownership on your own. 

The basic formula is simple.

TCO = acquisition costs + financing costs + running costs – resale value

Each category includes multiple, often overlooked factors. Acquisition costs include the dealer price, taxes, licensing, incentives, and administrative fees.

Financing costs account for interest payments.

Running costs are typically the biggest long-term expense and include fuel or electricity, insurance, maintenance, repairs, tolls, and even parking tickets.

Finally, the vehicle’s resale value offsets part of the expense, so understanding when to sell and which models hold value best is key. When you add these pieces together, you get a clearer picture of what a vehicle truly costs to own, helping you make smarter purchasing decisions.

Even with modest use, the cost of keeping a car can be several thousand dollars per year, making ownership a serious budget and lifestyle decision. And with a little deep dive into specific numbers, it is clear to see that for many owners, mileage is not the real cost driver. Vehicle depreciation and fixed costs, such as insurance or registration, can eat up a significant part of the budget.

The takeaway

A car can be helpful, but it’s not always the smartest financial choice for people who live in places where most errands and work trips don’t require driving. Some households depend on a vehicle because there’s no other way to get around, while others pay for insurance, parking, and basic upkeep even though the car is parked most of the time. When all those expenses are added together, the total can exceed what many households expect.

If you’re deciding whether to buy a car, look at how often you’ll use it and whether the monthly bills fit the way you live, especially if you already have most essentials within reach without driving.