How to Calculate the True Cost of Car Ownership
January 5, 2016

How to Calculate the True Cost of Car Ownership

Buying a car can be an enjoyable experience that brings a smile to your face (even if the salesperson is a pain in your behind). Maintaining your vehicle is not always as exciting. In fact, this can be downright frustrating at times. Before you pull the trigger and sign on the dotted line, it is important to first calculate the true cost of ownership for the vehicle. If you don’t do this, you may be surprised at how much money you put out in the years to come.

Generally speaking, there are three categories that come into play when calculating the true cost of owning a vehicle:

1. Maintenance

How often does the manufacturer suggest you change the oil? What about other fluids? How about tire rotations?

If you want your vehicle to last, it is important that you maintain it based on the manufacturer’s suggested schedule. Deviating from this can take a toll on your car, thus landing you back in the market sooner rather than later.

2. Insurance

You never know what the cost of insurance will be until you receive a quote. One of the biggest mistakes you can make is believing that your new car will be as cheap to insure as your old one. This is never the case. Don’t purchase a vehicle before you have a clear idea of how much it will cost to insure. 

Tip: don’t be tempted to lessen your coverage as a means of keeping your premium down. Cheaper insurance always means cheaper coverage. 

3. Gas

Have you ever heard this saying? Don’t buy a Cadillac if you can’t afford the gas. Even though new vehicles are achieving better gas mileage than ever before, this is still something to check on during the shopping process.

Upgrading from a compact car to a full-size SUV will be an eye opener in terms of how much you spend on gas. One car may get an average of 30 miles per gallon, while the other is lucky to achieve 17. Furthermore, bigger cars have bigger fuel tanks. This means more money paid out at the pump. How do you feel about dropping close to $100 to top off your tank?

There is nothing worse than learning too late that you can’t afford to keep your car gassed up. 

More than the Monthly Payment

As you can see, there is more to owning a car than making the monthly payment. The price of the car may be what you see when buying, but you need to understand the true cost of ownership. 

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