The Hidden Costs of Owning a Car

When it comes to budgeting for a new car, many first-time buyers only consider the purchase price and monthly payments.  However, that’s only half the battle.  AAA states that the average cost to own and operate a vehicle in 2018 was $8,849.  If you’re not prepared for the additional expenses, your dream car can quickly become a financial nightmare.  Here are some hidden costs of owning a car that can sneak up on you. In addition to the purchase price, regular maintenance, insurance premiums, fuel costs, and unexpected repairs can add up significantly over time. Registration fees and taxes are other expenses that new car buyers often overlook. Much like the hidden expenses of owning a home, these ongoing costs can strain your budget if you’re not adequately prepared.

Gas

Unless your name is Fred Flintstone, you’re going to need more than just your feet to get your car moving.  When it comes to buying gas, different cars have different fuel needs.  While most people can get away with using regular grade, some cars require premium gas which is more expensive.  You can estimate your fuel costs by knowing your cars MPG (miles per gallon), how many miles you’re likely to drive and the average gas price.  If you’re looking to save money, there are tricks you can use to improve your gas mileage.

• Slow down.  Every 5 MPH you drive over 60 MPH reduces your fuel economy by 7%.
• Take it easy behind the wheel.  Driving aggressively lowers your gas mileage by 15-30% on highways and 10-40% in stop and go traffic.
• Keep your tires properly inflated. This simple move can improve your gas mileage by 0.6%.

Insurance

If you plan to lease or finance your car, you may be required to have collision and comprehensive insurance coverage.  Collision insurance protects you if you get into an accident.  Comprehensive insurance will help you pay to replace or repair your vehicle if it’s damaged in an incident outside of your control.  For example, if a tree branch falls on your car or your vehicle is stolen.  Insurance rates are dependent upon a few factors such as where you live, your age, marital status, driving record and the kind of car you drive.  Typically, the more expensive the car the more you can expect to pay in insurance.  According to Insure.com, these are the cheapest cars to insure for 2019.

Registration and inspections

You can’t legally drive your car without it being registered.  Each state has its own method for calculating registration fees.  Some places charge a flat rate while others charge based on your vehicles weight, age or value.  Certain states also require periodic safety and emissions inspections, so you need to set aside money for that too.

Maintenance

Your vehicle’s not going to make it to 100,000 miles if it’s not properly serviced and maintained.  Experts recommend checking your lights, tire inflation and condition, windshield washer fluid and engine oil level monthly.  Additionally, your car is going to need oil changes, brake services, tires and trips to the car wash.  None of which are free.  To keep your car running smoothly, we suggest following the maintenance schedule in your owner’s manual.

Parking

Many people have dreams of living in a big city like Manhattan but don’t realize how much of a struggle it can be to find street parking.  As a result, you may have no choice but to pay for a monthly parking spot which isn’t cheap.  You can easily pay around $400 for monthly parking in NYC.  No matter where you live you may still be required to pay for parking when you visit certain areas.  This may mean dropping a couple quarters in a meter or paying an hourly rate in a parking garage.  Keep in mind, many garages raise their rates tremendously during big events.

Depreciation

Once you sign on the dotted line and drive your car off the lot it starts losing its value.  New vehicles depreciate by 20 percent within the first year.  By 60 months, it’s only worth 39 percent of its original sticker price.  That’s not good news if you’re planning to resell your car down the line.  However, some vehicles hold their value better than others.  For 2019, the Toyota Tacoma, Jeep Wrangler and Toyota Tundra have the best resale value.  Kelley Blue Book states they hold more than 56% of their resale value after 60 months.

Traffic violations

Many drivers know the traffic laws but still try to break the rules anyway.  At some point your luck is going to run out and the cops will catch you.  Depending on the violation, your insurance rate may increase when it’s time to renew your policy.  According to Insurance.com, here’s how much of a jump you can expect.