Everyone knows that owning a vehicle is much more expensive than taking public transportation, but exactly how much more expensive is it? Is it worth the costs to be able to go wherever you want to go, whenever you want to go and save time while you’re at it? From luxury sports cars to large 4×4 trucks to small hybrids, how much does it really cost to own a vehicle? And let’s not forget the ever-increasing cost of gasoline just to get from point A to point B. All together, a car costs thousands of dollars per year. Gas alone can cost over $2000 a year assuming you pay $40 a week (and many people spend much more than that). We’ll take a look at the basic expenses involved in this article.
The Cost of Owning a Vehicle
The Initial Purchase
The first thing you need to consider when thinking about owning a vehicle is how much you are willing to spend on the initial purchase. Is there a specific make or model you prefer? What type of vehicle are you in the market for? Small cars are generally cheaper than trucks and trucks are generally cheaper than luxury models. Getting a hybrid car is more expensive at the beginning but will save you money on gas throughout its lifetime.
Are you considering getting a used vehicle or do you want a brand new one? Keep in mind that new vehicles are much more expensive than vehicles just a few years old because they depreciate so quickly. Although you might think it’s easier to get a new one because the payments are affordable, remember that the lease is typically for 3 to 5 years meaning that you would be locked into paying an extended monthly fee for quite a while. Please note that your vehicle drops in value anywhere from half the amount of your current lease to the about the same amount as your current lease (especially if your lease is 5 years long). For example, if you have a lease of $400 a month, after 2 years of buying your vehicle, it will probably be worth a minimum of $5000 less anyway. Keep in mind that the monthly lease payment advertised is generally after taxes and without any added features so your actual vehicles payment could be quite a bit more.
If you want a new car but want an edge up on the depreciating value, you could consider buying a used vehicle that’s only a few years old either from the seller or from a dealership. Many dealerships will also give you great deals on last years’ model so they can make room for this years’ model. You can also lease a vehicle from someone else if you only need the car for a certain period of time. LeaseBusters.com is one of the many websites out there that can help with this. If you are getting a car loan for a brand new vehicle, it is strongly recommended that you put some money down first so your loan will be smaller and either your payment amount or the length of your loan will be less. This will save you money on the interest rate as well.
Other extra initial investment fees include registering your vehicle and getting a license plate put on. Don’t forget that each year your car registration needs to be renewed (you should receive a car renewal notice in the mail).
The Cost of Gas
Since gas seems to be getting more and more expensive each year, you might want to consider buying a car that is easy on the tank. As previously mentioned, hybrids are an excellent choice, but there are many other tips you could make use of in order to save money at the pump. Trucks and SUV’s are typically gas guzzlers while a small sedan could cost you much less in the long run. If you have to buy a truck or an SUV, save money by getting a 4×2 instead of a 4×4 since the 4×4 costs more in gas. You can also save money by getting a vehicle with a smaller engine; unless you are hauling heavy loads on a routine basis, a small engine will work just fine getting you from point A to point B. If you do have a truck, keep in mind that the cost of owning a diesel truck is far more than the cost of owning a regular truck just from gas prices alone. If you want to save money on gas, getting a small Toyota or Honda would be a good bet to start.
The Cost of Insurance
There is no way to get around paying insurance for your vehicle, but there are ways you can minimize the amount you pay. The amount of insurance you pay is based on many factors such as age (younger drivers will pay more than older and more experienced drivers), gender (men will pay more than women), relationship status (those who are married will typically pay less than those who are single), your choice of vehicle (insuring a brand new car will be much more than insuring one that is 20 years old), how much you drive per year, even your credit rating will impact your insurance rates (for more information, check out How to Build Your Credit).
Of course the type of coverage you get will factor in to your monthly costs as well. How much coverage you want your car to have will directly affect how much you end up paying. Don’t be afraid to call up your insurance provider and ask any questions you might have about your insurance policy; they’re there to help you and will answer any questions or concerns you might have. The last thing I want to mention is be sure to look around and compare insurance rates before you settle with one provider. You can do many online insurance comparisons to see which one would suit your personal need the best.
The Cost of Maintenance
It’s important not to forget the additional costs of owning a vehicle such as getting your oil changed, getting windshield washer fluid as well as other fluids that may need topping up, getting your car washed, buying winter tires, repairing any stone chips etc. All of these little costs here and there could be another $100 a month or so be sure to factor that in as well. Any added features you want to include such as getting a new stereo system with speakers or nice chrome rims will of course, cost you extra.
Don’t forget that any speeding tickets, parking tickets or any other violations sometimes occur and need to be paid in a timely manner if you don’t want further financial consequences.
The Cost of Repair
Although not every vehicle will need repairing, most will need something replaced or touched up during the course of your possession and it’s good to have some money set aside for that. You don’t want to be racking up debt just to pay for a few repairs just so you can get to your job. When it comes to the cost of repairing a vehicle, be aware that it costs more to fix a truck than a small sedan. This is because the truck parts generally cost more along with the labour per hour costs. Keep in mind that a 4×4 will cost more to repair simply because there are more moving parts to it.
One of the positive aspects of getting a new vehicle is that it is covered under warranty for a certain period of time, therefore saving you money on repairs that you might have had to deal with otherwise.
We would all like to think that our vehicles will never break down but these things do happen and it’s important to be prepared for them. It might be a good idea to put away a little bit of money into a separate savings account (or make an extra addition to your emergency fund) for these situations. Even if you just match whatever you pay for your insurance each month into your savings account, it will add up over the long run and might save you from dipping into your credit cards later on.
Conclusion
The cost of owning a car can be quite expensive but for some it is very well worth the price. If it’s a little bit too pricey for you however, there are other transportation options. Taking public transportation may be a little more time consuming but it is definitely less expensive. You could also try car pooling and pitch in for gas if someone with a vehicle gives you a ride to and/or from work. If you are set on buying a car, or already own a car, you could make a conscious effort to drive less. Try walking as much as possible, it will help both your heart and your wallet. If you own a car, it’s good to have a few hundred dollars each month that you can pay your insurance, regular maintenance, use for gas and put some away for an emergency fund for unexpected repairs (this of course is on top of any car loan payments you might have). If you prepare for the costs of owning a vehicle ahead of time, you won’t be caught off guard with the expenses once you get one.
The image used in this post is taken from Image: graur razvan ionut / FreeDigitalPhotos.net
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