By Genna Contino
Buyers shouldn't focus too much on a car's sticker price. These additional costs can now add up to an extra 50% of a typical monthly car payment.
Car prices are already giving drivers sticker shock, but rising insurance and maintenance costs have become increasingly burdensome for consumers.
Buying a car in 2026? You may experience sticker shock - both before and after you visit the dealership.
While eye-popping vehicle prices have been front and center for car buyers over the past several years, other less visible costs of car ownership have also been rising - but buyers often fail to take them into account when budgeting for a new car. Vehicle shoppers are leaving out the costs of insurance and maintenance when calculating which car they can afford, experts say - a mistake that has become increasingly costly.
Because the costs of car insurance and maintenance have grown significantly, financial experts say it's more important now to look beyond a vehicle's sticker price and include those costs when budgeting for a car. The cost of vehicle insurance has risen by about 55% since 2020, while prices for vehicle maintenance and repair are up roughly 47%, based on cumulative changes in consumer-price index data. The cost of both insurance and maintenance rose faster than the prices of used and new cars during the same period.
The average annual U.S. car-insurance premium is $2,697, according to Bankrate, or about $225 per month. The average cost to repair and maintain a car that's driven 15,000 miles a year is $1,650 per year, or about $138 per month, AAA data show. Together, the average insurance and maintenance costs are now $363 per month, about half of the average monthly car payment - and that's not even including the cost of gas and taxes.
&#34;Buying a car today means looking well beyond the sticker price,&#34; said Joon Um, a certified financial planner at Secure Tax &amp; Accounting in Hayward, Calif. &#34;Insurance, taxes, registration, fuel and maintenance can add a lot - especially with newer, tech-heavy cars that are expensive to fix.&#34;
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Still, buying a car is high on many consumers' priority lists this year. Nearly 40% of consumers in a survey released by TransUnion (TRU) on Tuesday said they intend to buy a vehicle, with the majority of them looking to purchase sometime over the next 12 months. Of those who aren't in the market for a car, 53% cited cost concerns and 44% said economic uncertainty was keeping them on the sidelines.
The affordability crisis has reached a boiling point with many middle- and lower-income Americans increasingly burdened by debt and struggling to cover basic household expenses. Inflation has put buying a car - especially a new car - out of reach for many, as the average price surpassed $50,000 last year. And after Nissan (JP:7201) ended production of its Versa sedan in December, no new mass-market cars are priced under $20,000, according to Kelley Blue Book.
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Now the floor for buying a new car has jumped to about $34,000, according to automotive-finance and insurance expert Joel Kansanback. That has pushed many would-be new-car buyers to consider a used car instead, he said.
Some people who find themselves in the bottom half of the K-shaped economy - in which upper-income people are spending more while lower-income households cut back - might have to buy a car in 2026 even if they can't really afford it, especially if they need one to get to their job.
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&#34;That lower part of the K[-shaped economy] that's really struggled ... they've got the oldest cars in history on the road, and some of them are getting pushed into the market just out of necessity,&#34; Kansanback said.
How to factor in hidden costs before leaving the dealership
A good rule of thumb for 2026 is to keep transportation costs, including car payment, insurance, gas, maintenance and repairs, at around 15% to 20% of your gross income - and to stay closer to the lower end if your cash flow is tight, said Joe Piszczor, founder of Washington Family Wealth in Washington, Penn. That means if you earn $100,000 a year, you should direct between $1,250 and about $1,670 toward monthly transportation costs.
Read more: Here are the ideas that could really help solve America's affordability crisis in 2026
The cost of car insurance varies greatly depending on the state you live in, the type of car you drive and your driving record. Automotive expert and analyst Lauren Fix recommends shopping around to find the lowest insurance cost available for the vehicle you're interested in. It pays to do this before you buy the car.
Online comparison tools like the Zebra or Jerry allow you to compare premiums from different insurance companies based on information about the car and your personal driving history. Getting familiar with the average cost of insurance for the vehicle you're interested in before you go to the dealership also gives you a chance to assess whether you can truly afford both the car and the insurance premium.
&#34;Just go out there and shop it around,&#34; Fix said. &#34;Because you might find that it's cheaper somewhere else, and they want your business.&#34;
Read more: Americans are starting the new year with record debt. Here's how they can get it under control.
As for maintenance costs, Kyle Playford, a certified financial planner at Freedom Financial Partners in Oakdale, Minn., said he works with clients to build $1,000 to $2,000 a year for repairs and maintenance into their budget, adjusting for inflation each year.
If you're already driving, you probably have an idea of how much you pay for gas annually in your state, which is another factor to consider when budgeting for transportation costs. AAA has a driving-costs calculator that lets you see how much a specific car will cost you over the long run. It factors in your location, financing, fuel costs, insurance, taxes, fees and maintenance to determine the total cost of car ownership.
Lowering your monthly costs is possible
Consumers do have some power to ease the financial burden of buying a new vehicle, Fix said. Here are some car-buying tips to help lower your monthly payment and additional costs.
Tips for getting a deal on the car itself:
-- Go for new 2025 cars on the lot that haven't sold yet. &#34;There are deals to be had,&#34; Fix said.
-- If you're switching car brands, ask the salesperson about &#34;conquest deals,&#34; a marketing incentive offered by carmakers to entice owners of a competing brand to switch to theirs.
-- If you're sticking with the same brand, ask about &#34;loyalty deals,&#34; which are discounts designed to encourage brand retention.
Tips for saving on maintenance and insurance costs:
-- If you're buying a used car, take it to a mechanic to get an inspection - you'll pay about $150 - before purchasing. Many used-car lots allow potential buyers to complete a prepurchase inspection. &#34;It is worth every penny, because if you don't, it could cost you thousands of dollars&#34; in maintenance and repairs down the road, Fix said.
-- Take a AAA defensive-driving course. Completing a program may result in an insurance discount or a reduction of points on your license, depending on the state.
Go for a gas-powered vehicle if you want to save money on insurance, especially since electric-vehicle tax credits that formerly helped offset costs have expired. &#34;If the vehicle is a plug-in hybrid or an electric vehicle, [insurance premiums] will always be higher than a gas-powered vehicle,&#34; she said, due to fire risk and higher repair costs.
Do you have questions about spending your money that you would like to see covered in MarketWatch? We would like to hear from readers. You can write to us at readerstories@marketwatch.com. A reporter may be in touch to learn more. MarketWatch will not attribute your answers to you by name without your permission.
-Genna Contino
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02-07-26 1051ET

Rising hidden costs of car ownership, including insurance and maintenance, are causing significant financial strain on buyers, adding up to 50% to monthly payments. Since 2020, insurance costs have surged by 55% and maintenance by 47%. The average monthly cost for insurance and maintenance is now $363, nearly half of the average car payment. With new car prices exceeding $50,000, many consumers are reconsidering their purchases, especially lower-income households facing economic challenges. Experts recommend budgeting transportation costs at 15-20% of gross income to manage these expenses effectively.

These hidden costs of car ownership are giving buyers sticker shock long after they leave the dealership