I own a car · Guide for Michigan
The real cost of owning a car, by vehicle type
The price is the least of it. What you pay every year in depreciation, insurance, fuel and maintenance decides whether the car suits you.
The average new car in the United States costs $11,577 a year to own and operate: about 77 cents per mile at 15,000 miles (AAA, 2025). And the biggest piece is not gas or the shop: it is depreciation, the money the car loses in value while it sleeps in your driveway. This guide takes that number apart by vehicle type so you can compare it with yours.
A note on wordingThis is not a "total cost of ownership": it leaves out parking, tolls, tickets and the time you lose. These are the six components AAA measures, with their figures and date. What is not here is not measured.
What makes up the average ($11,577 / year)
| Component | 2025 average | What you can control |
|---|---|---|
| Depreciation | $4,334 / yr | Almost all of it: a 3-year-old used car has already taken the biggest drop. It is the strongest financial argument for buying used. |
| Insurance | $1,694 / yr | Little. Compare every year and raise the deductible if you have savings. What changes by state, below. |
| Finance | $1,131 / yr | All of it: short term, big down payment, pre-approved rate. |
| Fuel | 13¢ / mile | Depends on the car and how you drive. A hybrid cuts it nearly in half. |
| Maintenance, repair and tires | 11.04¢ / mile | Depends on the brand and on doing it on time. See the maintenance schedule. |
| License, registration and taxes | $813 / yr | Almost nothing per year. The hit is the tax at purchase; see your state's section below. |
By vehicle type (cents per mile, AAA 2025)
| Type | ¢ / mile | At 15,000 mi / yr* | Quick read |
|---|---|---|---|
| Small sedan | 55.87 | ≈ $8,380 | The cheapest to own. Low depreciation, low fuel. |
| Hybrid | 63.94 | ≈ $9,590 | Pays back its premium through fuel if you drive in the city. |
| Subcompact SUV | 66.11 | ≈ $9,920 | The middle ground most people buy. |
| Medium sedan | 66.37 | ≈ $9,960 | More room than the small one for about the same cost. |
| Compact SUV | 68.53 | ≈ $10,280 | The best-selling segment; its cost reflects pricier insurance and tires. |
| Electric | 71.21 | ≈ $10,680 | Cheap fuel, high depreciation and insurance. Better if you charge at home. |
| Mid-size pickup | 79.11 | ≈ $11,870 | Capability you pay for every mile. |
| Medium SUV | 83.89 | ≈ $12,580 | Three rows, high fuel, high depreciation. |
| Half-ton pickup | 98.54 | ≈ $14,780 | The most expensive to own. If you don't tow, you are paying for capability you don't use. |
*Simple multiplication of AAA's per-mile figure by 15,000 miles, rounded. AAA calculates on a new car, five years and 75,000 miles, national average. A used car has less depreciation and finance cost, but more maintenance.
What changes in Michigan
- Insurance. In Michigan the price of insurance changes a lot depending on the PIP medical level you choose and your ZIP code. Ask your insurer for a price on the VIN before you buy. Watch the no-fault rule: if another driver wrecks your car, you can collect at most $3,000 from them for the damage to the car (mini-tort, MCL 500.3135(3)(e)); the rest comes from your own collision coverage, if you carry it.
- Tax at purchase. 6%. On a private purchase you pay 6% use tax at the Secretary of State when the title is transferred (it is on form TR-11L). A transfer is exempt when the new owner is the spouse, father or mother, brother or sister, child, stepparent, stepchild, stepbrother or stepsister, half-brother or half-sister, grandparent, grandchild, father-in-law or mother-in-law, brother-in-law or sister-in-law, son-in-law or daughter-in-law, grandparent-in-law, legal ward, or legally appointed guardian of the previous owner; the Department of Treasury may ask for proof of the relationship. The trade-in credit applies only when a dealer takes your car and the agreed-upon value is stated separately on the invoice: the limit was $5,000 from January 1, 2019 and rises $1,000 every January 1 (MCL 205.92(1)(f)(xii)), so in 2026 it is $12,000; from January 1, 2029 there is no limit.
- Climate. Cold and road salt are what wear a car down most in Michigan: wash the underside often in winter and check for rust on brakes, lines and exhaust. Before winter check the battery, antifreeze, tires (or winter tires) and wipers, and keep the tank at least half full.
- Comprehensive coverage. It is what pays for hail, flood, fire and theft. If the car is worth anything, it is not optional.
How to use this before you buy
- Take the price you can pay and subtract day-one tax and fees.
- Find the vehicle type in the table and multiply the cents by your real yearly miles (look at your current car: the odometer doesn't lie).
- Get an insurance quote on the specific VIN. It is the line that surprises most.
- If the yearly total is more than you can sustain, step down a segment. A small sedan costs half what a half-ton pickup costs every year, not just on purchase day.
Keep your vehicle information together
Sources
- AAA — Your Driving Costs 2025 (fact sheet, September 2025)
- AAA — New vehicle costs drop to $11,577 (press release)
- Michigan Department of Treasury — Use tax
- SOS — Michigan Department of State (Secretary of State)
This guide informs; it is not legal or financial advice, nor an offer, quote or appraisal. Every figure carries its source and date; check it is still current before you decide.
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