Buying a car is exciting. That thrill can quickly fade when unexpectedly high ownership costs arrive. It's easy to focus on the sticker price or monthly payment at the dealership, but that's just a small part of the equation.
Insurance, maintenance, repairs, and taxes can vary dramatically based on the car you choose and where you live. What seems like a great deal today can turn into a long-term financial strain, catching you off guard with rising expenses.
Before you sign, plan ahead for the full cost of ownership, car insurance savings app Jerry explains. Keep reading to uncover three common budgeting afterthoughts and how to avoid them so you can drive away with confidence, not buyer's remorse.
1. Underestimating Insurance Costs
Car insurance is one of the largest ongoing costs of ownership, and the Consumer Price Index indicates that it's rising by 20% or more year-over-year. For many drivers, it's starting to cause some significant financial trade-offs.
According to the Jerry 2025 State of the American Driver Report, rising premiums have forced 32% of drivers to cut back on vacations, 30% to spend less on clothes, and 26% to trim their grocery budgets in the past year.
Some car buyers assume their insurance rate will stay the same or only increase slightly with a new purchase. But premiums can vary widely based on factors like the car's make and model. Luxury cars or newer, high-tech EV models with higher repair costs often come with higher premiums, while cars with advanced safety features might qualify for discounts.
How to avoid: Get insurance quotes for the specific model you're considering before buying. This way, you won't be caught off guard by a premium you can't afford. Seventy-one percent of drivers factor insurance costs into their car buying decision.
2. Overlooking Repairs and Maintenance
No type of bill generates more distrust, confusion and frustration than car repair and maintenance bills, the State of the American Driver Report found. Not even medical bills.
The cost of repairs is also up. A single repair bill can run into the thousands, and even standard maintenance like oil changes, brake replacements, and tire rotations, if frequent enough, add up over time.
Some cars cost significantly more to maintain than others, and skipping routine care can lead to expensive breakdowns. Imported vehicles, for example, often have pricier parts and specialized service requirements, adding to the total cost. Compare brake pads from a Range Rover to those of a Ford Explorer or Toyota Highlander — the price difference can be substantial.
How to avoid: Research the typical maintenance and repair costs for the car model you're considering. It's also helpful to check fair car repair price estimates in your area for common repairs. A good rule of thumb is to set aside $50 to $100 per month for regular upkeep, which will ensure you're prepared for both routine maintenance and unexpected repairs.
3. Ignoring Taxes and Fees
Extra costs like sales tax, registration fees, and financing charges can quickly add up, adding thousands to the total price of your car. These expenses vary depending on where you live, and some states even charge additional fees for fuel-inefficient, electric vehicles (EVs), or luxury cars.
The problem is that many buyers overlook these costs until they're added to the loan, which can be a shock. Plus, the interest on your loan can significantly increase the overall amount you'll pay over time.
Timing your purchase can also impact these costs. Buying toward the end of the month or during sales events might offer opportunities to negotiate on fees and interest rates, saving you some money in the process.
How to avoid: Calculate the full cost of ownership, including sales tax, registration fees, and loan interest, using an online car affordability calculator. This will give you a more accurate picture of your total budget with all fees included.
The Bottom Line
A car's price tag doesn't tell the whole story. A little research now can save you thousands later. Before you buy, ask yourself:
- What will insurance really cost? Get accurate quotes before committing to any car, as premiums can vary significantly based on the model. Online tools can help you compare car insurance prices in minutes, before leaving the dealership lot.
- How much will it cost to maintain and repair? Some cars are more expensive to care for than others. Research average maintenance and repair expenses for the car model you're eyeing, and set aside a budget for ongoing upkeep.
- What taxes and fees will you face? Don't forget to account for sales tax, registration fees, and loan interest. Understanding these costs upfront can help you avoid financial surprises.
Methodology
Jerry's 2025 State of the American Driver report is based on data from a nationally representative survey of 1,000 people conducted in November 2024 using a platform and audience from Pollfish. All respondents own or lease a vehicle, drive at least once a week, and are responsible for paying for car insurance for themselves and/or their family. Respondents were blended for age, gender, and region. More information about Pollfish and its audiences can be found on its website. Inflation figures are based on data from the Bureau of Labor Statistics. Data on EV charging stations comes from the Department of Energy.