How Much Does It Really Cost to Own a Car?

When you’re shopping for a vehicle, one of the first things you probably think about is the monthly payment.

And while that’s an important number, it’s only one piece of what you’ll actually spend.

Between insurance, gas, maintenance, registration, and unexpected repairs, the true cost of owning a car can look quite different from the price you see on the window sticker.

Whether you’re buying your first vehicle, replacing an older car, or trying to figure out how much car you can comfortably afford, understanding these expenses can help you make a smarter decision.

At Honda of Lincoln, we work with shoppers throughout Lincoln, Omaha, Gretna, and surrounding Nebraska communities who want to find a vehicle that fits both their lifestyle and their budget.

Here’s what to consider before deciding how much to spend on your next car.

What Is the Average Monthly Cost of Owning a Car?

There’s no single monthly cost that applies to everyone.

Someone driving a paid-off Honda Civic will have a very different budget than someone financing a new three-row SUV.

Your expenses depend on the vehicle, how much you drive, your insurance coverage, financing terms, and maintenance needs.

But to understand the full picture, let’s look at a hypothetical monthly budget.

Car Ownership Expense	Example Monthly Cost
Car payment	$350
Insurance	$150
Gas	$120
Maintenance savings	$60
Registration and taxes savings	$30
Estimated monthly cash expenses	$710

These are illustrative budgeting amounts, not average Nebraska ownership costs or actual Honda of Lincoln quotes. Your expenses may be significantly higher or lower. This example also excludes parking, tolls, depreciation, and certain other costs.

In this example, someone with a $350 car payment would need approximately $710 per month to cover the expenses listed.

That’s more than double the vehicle payment alone.

And if you’re buying a car for the first time, those additional expenses are especially important to understand.

1. Your Monthly Car Payment

For many drivers, the vehicle payment is one of the largest monthly expenses.

But your payment isn’t determined by the vehicle’s selling price alone.

Several factors affect how much you’ll pay each month:

• Vehicle purchase price
• Down payment
• Trade-in value and any existing loan balance
• Interest rate (APR)
• Loan term
• Taxes, fees, and optional products included in financing

For example, extending a loan from 60 months to 72 months may lower your monthly payment, but it can also increase the total interest you pay.

A lower monthly payment doesn’t necessarily mean you’re getting a better overall deal.

What should you look at besides the monthly payment?

Before choosing a financing option, compare the total amount financed, APR, loan term, total interest, and overall repayment amount.

It’s also worth considering how long you plan to keep the vehicle.

If you frequently trade vehicles, a long loan term may increase the risk of owing more than your vehicle is worth.

Helpful tip: Start with your total transportation budget, then work backward to determine what monthly vehicle payment makes sense.

2. Car Insurance Costs

Insurance is another major expense that can vary quite a bit from one driver to another.

Your premium may depend on factors such as your driving history, age, coverage choices, location, vehicle, and insurer.

For example, a first-time driver may pay considerably more for coverage than someone with many years of driving experience.

The vehicle you choose can also affect your insurance costs.

A newer or more expensive vehicle may cost more to repair or replace, but insurance pricing isn’t always predictable based on vehicle price alone.

How can you plan for insurance costs?

Before purchasing a vehicle, get insurance quotes for the specific models you’re considering.

You might be surprised by how different the premiums are.

If you’re financing a vehicle, your lender will typically require comprehensive and collision coverage in addition to any legally required liability insurance.

Don’t wait until after you’ve purchased the car to find out what coverage will cost.

3. Fuel Costs: How Much Does Gas Mileage Matter?

Fuel efficiency can make a noticeable difference in your monthly transportation expenses, especially if you drive a lot.

Think about your normal week.

Are you commuting across Lincoln every day? Driving between Lincoln and Omaha? Taking frequent road trips?

The more miles you drive, the more important fuel economy may become.

Example: Comparing Two Vehicles

Let’s say you drive 12,000 miles per year and gasoline costs $3.25 per gallon.

Here’s how annual fuel expenses could compare:

Fuel Economy	Estimated Annual Fuel Cost
25 MPG	$1,560
30 MPG	$1,300
40 MPG	$975
50 MPG	$780

Calculations are illustrative and use a hypothetical $3.25-per-gallon gasoline price. They are not current local gas prices or model-specific EPA estimates.

In this example, a vehicle averaging 40 MPG would cost approximately $585 less per year in fuel than one averaging 25 MPG.

Over several years, that difference can add up.

Could a Honda Hybrid Help Reduce Fuel Costs?

If you drive regularly, a fuel-efficient vehicle may be worth considering.

Honda offers hybrid options in models such as the Civic, Accord, and CR-V.

Hybrid vehicles combine a gasoline engine with electric motor assistance to improve efficiency in certain driving conditions.

Honda’s conventional hybrid models don’t need to be plugged in, which can make them appealing for drivers who want improved fuel efficiency without changing their fueling routine.

However, hybrid models may have different purchase prices than their gas-powered counterparts.

The smartest comparison considers both the upfront price and the potential fuel savings over time.

4. Maintenance and Routine Service

Even a reliable vehicle needs maintenance.

Oil changes, tire rotations, filters, brakes, tires, and other wear items are all part of keeping a vehicle on the road.

Maintenance costs vary depending on the vehicle, mileage, driving conditions, and service requirements.

For example, a vehicle that spends most of its time on the highway may have different maintenance needs than one frequently driven short distances in stop-and-go traffic.

What maintenance expenses should you plan for?

Common ownership expenses include:

• Engine oil and filter changes when required
• Tire rotations and eventual tire replacement
• Brake inspections and repairs
• Engine and cabin air filters
• Battery testing and eventual replacement
• Fluids and other manufacturer-recommended maintenance

A helpful approach is to set aside money each month for future service rather than waiting until an expense comes up.

Even if you don’t need maintenance every month, saving consistently can make larger expenses easier to manage.

Does buying a new Honda reduce maintenance costs?

A new vehicle starts with no previous owner’s wear and includes applicable factory warranty coverage.

However, warranties generally don’t cover routine maintenance or normal wear items.

Some eligible new Honda vehicles may include complimentary scheduled maintenance benefits under applicable Honda programs. Coverage depends on the model, model year, and program terms.

It’s worth reviewing those benefits when comparing new and pre-owned vehicles.

5. Nebraska Vehicle Registration and Taxes

This is an expense that can catch first-time buyers off guard.

When purchasing and owning a vehicle in Nebraska, you may have costs beyond the vehicle’s selling price.

These can include applicable sales taxes, title and registration fees, motor vehicle tax, motor vehicle fee, and other charges.

The amount you pay depends on factors such as the vehicle, its value and age, your location, and applicable state and local requirements.

Some expenses are due when you purchase and register the vehicle, while others recur when you renew registration.

Why does this matter for your budget?

If you’re saving for a down payment, don’t forget to account for the money you’ll need for taxes and registration.

And if you’re estimating annual ownership costs, include your expected registration renewal expenses.

The Nebraska DMV and your county treasurer can help you determine applicable charges.

6. Depreciation: The Cost You Don’t Pay Every Month

Depreciation is one of the most overlooked parts of car ownership.

It’s the amount of value your vehicle loses over time.

For example, imagine purchasing a vehicle for $30,000 and later selling it for $20,000.

That $10,000 difference represents depreciation before considering any other ownership expenses.

Unlike gas or insurance, depreciation doesn’t show up as a monthly bill.

But it can have a significant effect on your total cost of ownership, especially if you plan to sell or trade the vehicle after a few years.

Do new cars depreciate faster than used cars?

New vehicles often experience more depreciation during their early ownership years.

Buying used may allow you to avoid some of that initial decline, although used vehicles continue to lose value too.

Actual depreciation depends on the model, mileage, condition, market demand, and ownership period.

If you plan to keep your vehicle for many years, depreciation may matter differently than it would if you intend to trade it in after two or three years.

7. Unexpected Repairs and Emergency Expenses

No one plans for a dead battery, damaged tire, or unexpected repair.

But those things can happen, even when you maintain your vehicle properly.

That’s why it’s smart to include some room in your budget for unplanned transportation expenses.

If you purchase a pre-owned vehicle, reviewing its service history and condition can help you understand potential maintenance needs.

If you’re considering a Certified Pre-Owned Honda, review the specific HondaTrue warranty benefits and exclusions.

And regardless of whether you buy new or used, maintaining an emergency savings cushion can make unexpected expenses less stressful.

Is It Cheaper to Keep Your Current Car or Buy a New One?

This is another question worth asking before you start shopping.

If your current vehicle is paid off and running well, keeping it may be the more affordable option.

Even if you occasionally need repairs, those expenses might still be less than taking on a new monthly payment.

On the other hand, if your vehicle frequently needs expensive repairs, has reliability concerns, or no longer meets your needs, replacing it may make sense.

Before making a decision, compare the expected costs of keeping your current vehicle with the costs of purchasing something different.

Consider repairs, insurance, fuel, financing, and your vehicle’s current trade-in value.

How Can You Lower Your Car Ownership Costs?

You don’t necessarily need to choose the smallest or cheapest vehicle to keep expenses manageable.

A few practical decisions can help.

Choose a vehicle that fits your actual needs

If you don’t need three rows of seating, a smaller SUV may provide the space you need while costing less to purchase and fuel.

For example, a Honda HR-V or CR-V may be worth considering instead of a larger SUV if you primarily commute and run errands.

Compare fuel economy

If you drive a lot, compare gas and hybrid options.

Even modest fuel savings can become meaningful over several years.

Shop insurance before purchasing

Insurance costs can vary significantly between vehicles and providers.

Getting quotes before buying helps you avoid surprises.

Keep up with maintenance

Following the manufacturer’s maintenance recommendations can help prevent avoidable problems and keep your vehicle operating as intended.

Compare new, used, and Certified Pre-Owned vehicles

A pre-owned vehicle may offer a lower purchase price, while a new vehicle may qualify for promotional financing or provide additional warranty coverage.

Comparing actual vehicles and offers is more useful than assuming one category is always cheaper.

Frequently Asked Questions About Car Ownership Costs

How much does it cost to own a car per month?

The amount varies based on your vehicle, financing, insurance, fuel usage, maintenance, and registration costs. A realistic budget should include all of these expenses rather than just the car payment.

What are the hidden costs of buying a car?

Commonly overlooked costs include sales tax, registration, insurance, maintenance, tires, depreciation, and financing interest.

Is a hybrid cheaper to own than a gas-powered car?

A hybrid may save money on fuel, especially for drivers who travel significant distances or spend time in city traffic. However, purchase price, insurance, maintenance, and ownership period also affect total costs.

How much should I save for car maintenance?

There’s no universal amount. Maintenance costs depend on the vehicle, age, mileage, and service schedule. Setting aside a manageable amount each month can help prepare for routine service and unexpected expenses.

Is buying a used car cheaper than buying new?

Used vehicles generally have lower purchase prices, but financing rates, maintenance needs, and warranty coverage can affect total costs. Compare specific vehicles rather than assuming one option will always cost less.

Should I pay off my current car before buying another one?

That depends on your finances, vehicle value, loan balance, and transportation needs. If you owe more than your vehicle is worth, trading it in may require paying the difference or financing negative equity, which can increase the cost of your next vehicle.

Find a Vehicle That Fits Your Budget at Honda of Lincoln

The best vehicle for your budget isn’t necessarily the one with the lowest advertised payment.

It’s the one you can comfortably afford to purchase, drive, insure, and maintain.

At Honda of Lincoln, you can explore new Honda models, shop pre-owned vehicles, compare fuel-efficient hybrid options, and review financing information before making a decision.

Whether you’re looking for an affordable commuter car, a practical family SUV, or something more fuel-efficient, our team can help you explore your options.

You can browse inventory, calculate payments, and estimate your trade-in value online to get a better understanding of your next purchase.

Visit Honda of Lincoln at 2770 Yankee Hill Road in Lincoln, Nebraska, or start shopping online today.