As affordable options disappear, the prices of used cars will skyrocket
Used car prices have skyrocketed 41% since 2019. Discover why $15,000 cars are disappearing so quickly.
Finally, according to the AAA, there are some good news for car shoppers. New vehicle costs have fallen this year.
The annual cost of owning and operating a new vehicle has dropped to $11,577, a decrease of $719 from 2024, or $964.78 a month. Depreciation, lower fiscal fees, lower fuel prices, and a shift to more affordable vehicle options have contributed to the decline, AAA said.
New vehicle prices alone have increased 22%, with insurance up 56%, since 2019, before the pandemic, according to inflation data from the Bureau of Labor Statistics. Adding higher labor costs and more expensive car parts didn’t feel like a good time to buy a car for a while.
But please pause.
Greg Brannon, director of automotive research at AAA, said, “When you notice the decline in ownership costs this year, it may be appealing to rush to the dealership for a new car, but doing maths remains important over time.
Is this a good time to buy a car?
Although it’s a little better time to buy a car compared to recent years, “consumers should consider all the costs involved before making a commitment,” Brannon said.
For example, you need to carefully consider your transportation needs. Pickup trucks are great for heavy duty hauling and towing, but average $6,402 (43.3%) a year compared to small sedans.
Try AAA’s operating cost calculator to determine the cost of owning a different car. This is a customizable digital tool that provides cost analysis for a specific vehicle per category up to five years ago.
Is it cheaper to own an EV than a gas car?
According to the AAA, electric cars are no longer cheaper to own than gas-powered cars. He said the difference in fuel prices drove the flip.
The electricity price for a charged EV rose just to $0.167 per kilowatt-hour from $0.159 in 2024, with the average gas price falling 12.8% to $0.13 per mile.
“EVs still offer fuel savings than half of gas vehicles, but this does not adequately offset the higher costs of ownership,” AAA said in the release. “As a result, EVs have become more expensive overall across all vehicle categories in this study.”
Why did the cost of new vehicles drop?
Depreciation – The difference between the purchase price and resale value of a car is the most important cost of ownership of a vehicle. This year, depreciation lost an average annual value of $4,334 compared to $4,680 per year in 2024. Part of the decline expects resale value to rise as prices of partially new vehicles rise due to tariffs.
Financial Fees – According to AAA, estimated finance costs in 2025 fell 15% from $1,332 in 2025, down $1,131 from $1,332 to $1,332.
Fuel Price – Average fuel costs fell 12.8% from last year to $0.13 per mile. Regular grade gasoline for the vehicles under investigation averaged $3.151 per gallon, down from $3.539. Meanwhile, the electricity price for charging electric vehicles has risen slightly from $0.159 in 2024 to $0.167 per kilowatt-hour.
Will the cost of ownership of new vehicles continue to decrease?
Aaustin Shivers of AAA Automotive Engineer said no one knows.
“So many things can change with annual fuel prices, interest rates,” he said. “If anyone could predict that, they’d make a lot of money.”
Here are the best advice AAA has for car buyers:
- Create monthly or annual budgets and ownership and operating cost factors before purchasing.
- Each transaction and negotiation keeps the other transactions and negotiations separate – the cost of the car, the finance rate, and the trade-in value.
- Before discussing financial fees with your car dealer, you can get pre-approval from your financial institution to ensure you get the highest available loan interest rates.
- When considering where to buy a used car, go beyond the dealership (online and in-store).
Medora Lee is a money, market and personal finance reporter for USA Today. mjlee@usatoday.com and Subscribe to our free daily money newsletter Personal finance tips and business news every Monday to Friday.
