Cost of Owning a Car
Like with other expenses or investments, it’s important to understand the total cost of owning a car before making any major decisions. Use an online car ownership cost calculator and consider these values to help you figure out what you can afford:
- Maintenance and repairs: The average cost of repairs, maintenance, and tires is $99 a month for a new car. This doesn’t even include oil changes or tire rotations, which is usually needed to be budgeted for at least 3-times a year. If your car isn’t under warranty, it’ll be smart to set aside money to cover any accidents.
- Gas: Gas prices by the gallon change depending on your area so make sure to do your research first. You can multiply this number by the total cost you spend on fuel. If you don’t know this, you need to divide the number of miles you drive each month by your car’s fuel economy rating.
- Depreciation costs: Unfortunately, cars are an investment which in itself adds to your cost by losing its own value as soon as you leave the dealership. After three years, your car’s value can depreciate to 45% of its original price. Leasing or minimizing customization can slow down the speed of depreciation. Or, consider buying a car that holds its value in the long run, even if it means a higher purchasing cost initially.
Car Buying Tips
- Consider extra warranties: You can save on over $1,000 of repair costs by purchasing a factory warranty on your new car. Although this may be extra costs to your initial bill, it can save you time and increase protection if your car needs any repairs. Factory warranties last for 3 years or around 36,000 miles.
- Ball under your budget: Car finder search tools can show you different car models ordered by price. To play it safe, why not set your maximum price below what you think you can afford? It’s important to consider how easy it is for sales tax and other hidden fees can add up.
- Know your stuff: Take time to learn the language of car buying and auto loans to increase your confidence before stepping into that dealership. The car-buying process can be very intimidating for first-time buyers, therefore a little bit of research can help you get the bang for your buck. You’ll also be less inclined to fall for any tricks the salesperson is using to get you to spend more unnecessarily.
Tips on Saving for Your Car
- Cut down on expenses: Eliminate unnecessary expenditure by living a frugal lifestyle. Start small, for example by assessing your household bills by shopping and comparing gas companies in Georgia to find the most competitive rate and save on your monthly utility bill.
- Budget essential purchases: Budgeting creates a plan for your spending. By mapping out essential purchases, you can allocate any left over money for savings towards buying a car, and then treat yourself to what’s left. Just remember, you have a goal in mind to save for a car. When you reach that goal by budgeting, that’s when the real fun will begin.
- Shop at the right time: Dealerships have their own goals to impress their boss. Your timing can be the make or break of their next bonus and in return you may also get a better deal. Try shopping just before the end of a month or a sales quarter.
By reviewing your total cost of ownership each month, you can manage money a lot easier. Try to save at least 15% to 20% of your income to cover vehicle costs. Saving and budgeting are small prices to pay so you can cruise debt free with your new ride.