It costs money for people to get around—whether it’s by taking public transportation, renting a vehicle, using ride-hailing services, or buying a car. For those who choose to buy a vehicle, it’s likely to be one of the most expensive purchases they’ll ever make, with home-buying being the costliest. While the upfront cost of a car gets the most attention, it’s important to know there are additional costs that add up over time. Other than the interest rate on the financing, here are some additional costs to consider before purchasing a vehicle:

Registration and Excise Tax

In Maine, everyone is required to register their vehicle annually by law, regardless of whether the vehicle is purchased new or used. The yearly cost of registration is $35. In addition to the registration fee, people are charged an agent fee, with costs varying, but usually around $5. To complete the registration process, car owners need to pay an annual excise tax on their vehicle. In Maine, the excise tax is based on the manufacturer’s suggested retail price (MSRP) of the vehicle when it was sold new. In the first year that a car is registered, the excise tax will be the highest. The price declines each year of the vehicle’s life until its sixth year and subsequent years. For example, if someone purchased a new vehicle for $30,000 and registered it for the first time, they would pay the following:

$30,000 / $1,000 = $30 -- $30 x $24 = $720

Their total excise tax in the first year would be $720. If they were registering the vehicle for the sixth or subsequent year, they would pay the following:

$30,000 / $1,000 = $30 -- $30 x $4 = $120

Their total excise tax in the sixth or any subsequent year would be $120.


Auto insurance protects people from having to pay the full cost of vehicle repairs, a replacement vehicle, or medical expenses following an accident. In Maine, it is against the law to operate a vehicle without insurance. The average annual cost of auto insurance in the Pine Tree State is $294 for minimum insurance and $965 for full coverage. While full coverage is more expensive, having better insurance could save a lot of money in the event of a total loss due to theft or an accident.


While the cost of fuel may seem insignificant to some when they’re purchasing a vehicle, it’s important to understand the cost of gasoline can quickly add up. With fuel costs around $4 per gallon across Maine, visits to the pump can quickly impact a budget. On average, people are spending $131 on gasoline for their vehicle each month.


Keeping a vehicle running smoothly is an ongoing expense. Between oil changes, new tires, battery replacements, new windshield wipers, services, and more, car owners should budget for regular maintenance and upkeep. According to a study by AAA, a new car’s routine maintenance and repairs could cost an average of $0.09 per mile. If someone drives around 10,000 miles per year, that comes to $900. The older the vehicle, the more costly it is to maintain. That is because parts wear down over time and need to be replaced more often than on a new vehicle.


If someone lives in the city, it’s likely they’ll need to factor parking costs into their budget. Monthly parking garage passes in Portland are around $140, with meters charging around $2.50 per hour. Car owners in rural areas likely won’t have to factor these costs in, but anyone living or working in the city should plan for recurring parking expenses.

Know All Your Costs

The bottom line is that the advertised price of a vehicle is just one consideration when determining the full cost of owning a car. Adding up the cost of registration and excise tax, insurance, gasoline, maintenance, and parking can help people get a better sense of the full cost of buying a car and help plan their budget accordingly.

If you’re looking for an auto loan or want help budgeting for a vehicle, contact us at, or call 800.649.3495.

Adapted from the Financial Literacy Blog of the Maine Credit Union League – November 10, 2022

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