P&A Providers & Administrators
MenuMENU
SearchSEARCH

Escalating Finance Costs Drive 24% Spike in TCO

AAA analysts say bigger price tags and higher interest rates have conspired to raise American new-car buyers’ average annual total cost of ownership to $9,282, an all-time high and a 24% year-over-year increase.

September 12, 2019
Escalating Finance Costs Drive 24% Spike in TCO

Depreciation remains the No. 1 contributor to new-vehicle buyers’ total cost of ownership, but finance costs grew at a higher rate than any other factor over the past 12 months, according to AAA.

Photo by fo.ol via Flickr

2 min to read


ORLANDO, Fla. — Finance costs on new car purchases have jumped 24% in 2019, according to new AAA research, pushing the average annual cost of vehicle ownership to $9,282, or $773.50 a month. That’s the highest cost associated with new vehicle ownership since AAA began tracking expenses in 1950 and a reminder that the true costs of owning a vehicle extend far beyond maintenance and fuel.

“Finance costs accounted for more than 40% of the total increase in average vehicle ownership costs,” said John Nielsen, AAA’s managing director for Automotive Engineering & Repair, in a press release. “AAA found finance charges rose more sharply in the last 12 months than any major expense associated with owning a vehicle.”

Ad Loading...

Read: Prime Buyers Flock to Used Vehicles in Q2 Report

The new figures come from AAA’s Your Driving Costs report, which reviews 45 vehicles in nine categories to determine the average annual operating and ownership costs of each. AAA focuses on top-selling, mid-priced models and compares them across six expense categories, including finance charges as well as service costs, insurance, and depreciation.

The spike in finance charges — which rose from $744 to $920 — was fueled by rising federal interest rates and higher vehicle prices.

Depreciation remains the single biggest cost of ownership, accounting for 36% of the average annual cost. It slowed a bit this year, with vehicles included in the study losing an average of $3,334 a year, up $45 — or 1.4% — from last year. In 2018, depreciation rose by $117, or 3.7%. In two vehicle classes this year — small and medium sedans — depreciation costs actually declined.

The spike in finance charges — which rose from $744 to $920, a nearly $200 increase — was fueled by rising federal interest rates and higher vehicle prices. It comes as 72-month car loans have become increasingly common — meaning car buyers are paying more, and longer, for vehicles that lose value the moment they’re sold.

Ad Loading...

AAA found that, on average, every 12 months added to the life of a loan adds nearly $1,000 in total finance charges.

“Smaller monthly payments may be tempting to potential buyers, but they can add big costs in the long run,” Nielsen said.

Read: AAA: EV Awareness Gap Slow US Sales

Originally posted on F&I and Showroom

More Industry

Two men and one woman standing in front of blue walled Chevrolet dealership entrance.
Industry•by Hannah Mitchell•October 27, 2026

Badger State Dealership Gets New Owner

The longtime southern Wisconsin store moved from one area auto group to another, keeping the business in Dairyland.

Read More →
Two hands, one handing off set of keys to the other.
Industry•by Lauren Lawrence•October 27, 2026

The Cycle of Negative Equity

Third-quarter data shows consumers still rolling over debt and stretching loan terms, raising their risk of remaining underwater.

Read More →
Orange electric vehicle charging station.
Industry•by Lauren Lawrence•October 20, 2026

Charger Network Growth Slows

Despite a projected increase in public EV chargers in 2026, charging infrastructure remains a top concern for consumers as the gap between the most and least EV-friendly places remains substantial.

Read More →
Ad Loading...
Fan of $100 bills atop a white envelope
Industry•by Hannah Mitchell•October 13, 2026

Lenders, Consumers Take on More Auto Loan Risk

September records loosened credit access the most in over a decade as buyers took advantage of the conditions to afford trading, though loan applications fell.

Read More →
Red type R Honda civic parked on road.
Industry•by Lauren Lawrence•October 13, 2026

Next-Gen Hybrids in Sight

Dealerships can expect to see revamped hybrids from Honda next year as the company rolls out a new system and model lineup.

Read More →
Dodge ram emblem on orange vehicle exterior
Industry•by Hannah Mitchell•October 6, 2026

Gem State Stores Change Hands

A larger auto group founded in the industry’s early years sold two franchises to a neighbor group that's on a growth spurt.

Read More →
Ad Loading...
Graphic of model car driving on fake road.
Industry•by Lauren Lawrence•October 6, 2026

Charging In Motion

Honda has been researching wireless in-motion charging for electric vehicles since 2025, and new technology developments have put it a step closer to a final product.

Read More →
front grill of a Ford truck with blue Ford emblem
Industry•by Lauren Lawrence•September 30, 2026

Twin Cities Stores Sell

Minnesota-based Walser Automotive Group made what it called the most significant acquisition in its history with a three-rooftop deal in Minneapolis.

Read More →
Diesel engine on a production line in a factory
Industry•by Hannah Mitchell•September 29, 2026

U.S. Auto Sales Still Below Prepandemic Levels

Mobility Global industry observers don’t expect the market to return to the higher volumes that became routine before Covid but to stay well below its potential.

Read More →
Ad Loading...
Front of red tesla car.
Industry•by Lauren Lawrence•September 22, 2026

The Powertrain Shift

Electric-vehicle owners are backpedaling, according to new data, with product availability driving many to shift back to gas-powered engines.

Read More →