The true cost of owning a car is always far greater than just the actual price of the car.
When I bought my car in 2008 my credit still wasn’t that great. It wasn’t bad – I was still working on building it. Therefore the first car lot I looked at offered me an interest rate that I couldn’t afford to pay. I didn’t have the cash to pay for the car so I had to keep looking for an interest rate that made sense for me.
I kept looking until I found financing that suited my needs.
I ended up getting a deal on the car overall. The purchase price was around $18,000 and I also got credited $3,500 by trading in my previous car.
All in all my car payment ended up being $325 per month over a five year term. I hustled and paid the car off within two and half years.
However the price of a car is much more than the principal and interest on a loan. There are a lot of interesting infographics on this subject that can help you visualize the true cost of owning a car.
Here’s my take.
Other Expenses
Unfortunately loan payments aren’t the only factors that weigh into the true cost of car ownership. If you’re thinking of buying a new vehicle here are some other factors you need to consider:
- Insurance
- Fuel Costs
- Maintenance
These costs can add up quickly and you need to know what the final number will be before you purchase a new car.
You should also do your research on different loans and interest rates. One place you can check is Evolution Money.
Saving Money on Vehicle Related Expenses
My year as an insurance agent taught me how wildly different insurance premiums are for different vehicles. For example, if you are planning on purchasing a highly rated, yet moderately priced SUV your insurance shouldn’t be too terribly high. (As long as you’re driving record and credit score are good, that is.) But if you are purchasing a small sports car – watch out. You’ll pay the price when it comes to insurance.
You also need to consider the fuel economy of a new vehicle. The better the gas mileage the less you’ll spend on gas related costs.
Lastly, but most important to me is the quality of the vehicle. I am not a huge car lover. What I want is a car that I can drive for ten or more years and put at least 200,000 miles on. I don’t want to buy a new car every couple of years. I want a vehicle that lasts.
Maintenance is a huge component of making a vehicle last so figure that into your price as well.
What tips do you have for saving on the cost of car ownership?
Good points. When most people purchase a car, they don’t look at all the other costs involved in owning it…they just look at the price (actually many just look at the monthly payments). My co-workers bought diesel VW and while it might save some on gas, the maintenance is much more expensive…so I don’t think it’s worth it in the end. I drive a lot on my commute and I’ve been telling some friends that regular gas is fine…no need for premium. But some drive luxury cars which state in the manual that it requires premium, better follow the manual just in case.
These are really important things to keep in mind for when I buy a car when my car dies. I know it is going to die soon, it has 192,000 miles on it.
My car is paid off and I still spend about $250 month on costs of insurance and gas. When I run the numbers I’m always thinking that I want to save or invest that money! Mr. Money Mustache rides his bike everywhere …. in the heat, the snow, what ever. I think that is great. However, I recognize that I am not Bad Ass. I’m okay with that. 😉
My point is that most of us will have transportation costs. Public transportation is sketchy in my area. I do live close to the bus stop …. the bus comes by once an hour. How can I get where I need to go on time with that? Plus, the kids. Also, an adult monthly pass is $100. The kids passes are $30 each. I have three kids so my total for bus passes would be $190 a month. Not much of a savings for the inconvenience of having to bum rides off of friends for all the sports activities etc. Plus, I think I feel safer at night in my car.
My friend has a nearly brand-new Mustang. Needless to say his insurance is NOT cheap! I think the best way to save is to make the car last as long as you can. I drive an older car with 215k miles on it and I’m hoping it will last me another year or even longer. The longer I can put off buying a new one the longer I can put off car payments and save for the new one.
I’m so with you on this. When I bought my car I made sure it didn’t have a lot of fancy bells and whistles so there would be less to break down. As for insurance, ugghh, I had my first ever accident and claim after 25 years of driving. It was a fender bender. No damage to the othe vehicle just my front end got bent some. Since it was my fault I am now considered a dangerous driver and for 6 years I will be in the highest category for insurance. I am rated the same as a street driver who takes out a bus shelter and a couple pedestrians. I wish I could get rid of my car.