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Low fuel costs drive vehicle expenses to six-year low

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The cost of driving is at a six-year low thanks to lower fuel prices, according to AAA's "Your Driving Costs" report for 2016.

The cost of driving is at a six-year low thanks to lower fuel prices, according to AAA’s “Your Driving Costs” report for 2016.

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SALT LAKE CITY — The cost of driving is at a six-year low thanks to lower fuel prices, according to AAA's "Your Driving Costs" report for 2016.

The study, based on the cost of a new vehicle driven 15,000 miles a year, concluded that the average annual cost to own and operate a vehicle is about 50 cents per mile.

That's a decrease of 1.6 percent and a savings of 8 cents per mile from the previous year, according to the report.

AAA used fuel, insurance, maintenance, depreciation, license and registration, and finance costs to calculate the total cost of driving.

Almost all categories increased by at least a few percentage points for 2016, but a drastic 24.6 percent drop in fuel costs brought the yearly estimate to a six-year low.

"Fortunately, this annual savings more than offsets the moderate increases in maintenance, insurance, finance charges and other costs associated with owning and operating a vehicle,” said Rolayne Fairclough, AAA Utah spokeswoman.

A 25 percent drop in fuel prices paired with redesigned cars with improved fuel economy resulted in the decrease, AAA reported.

The low cost of fuel has other impacts. AAA said insurance costs are rising 9.6 percent this year, the highest increase in all categories. As low fuel prices encourage people to drive more, there is an increase in collisions, which leads to higher insurance payouts, according to AAA.

The report said an increase in new car sales has caused depreciation costs of used and off-lease cars to rise nearly 2.9 percent. With an estimated price tag of $3,759 per year, AAA called depreciation "the single largest ownership expense."

The cost of shop labor, extended warranties and synthetic oil required by some new engines led to a 3.3 percent increase in maintenance costs, according to the report.

Maintenance estimates don't include tires, but AAA thanked the "competitive and dynamic nature of the tire market" for leaving the cost of tires "relatively unchanged."

Tax rates and higher sale price of cars caused license, registration and tax costs to rise 3.3 percent. AAA reports that car-related fees have been increased by many states and municipalities.

These higher fees, which are usually included in vehicle financing, contributed to a relatively low increase in finance charges, AAA said. The costs are up $14 from last year, or 2.1 percent.

The full report includes specific details for different car sizes, as well as more comprehensive information.

Email: elarson@deseretnews.com