Five Extra Costs to Consider when Buying a Car

Steven Scott



You've thought about it long and hard, saved every penny you could, and now you're ready to buy that car you've had your eye on.

Before you rush to the nearest car dealer to sign the paperwork, it's a good idea to know what the true cost of owning a new ride will be beyond the sticker price. You want to be sure you understand all the expenses surrounding your vehicle purchase before you buy. Here are some important things you should consider when gauging the cost associated with the car you have in mind.

Car Insurance

One thing you can be sure of is that you should insure your vehicle. In fact, it's required to operate a vehicle in most states legally. Many factors play a role in determining insurance premiums, such as the make and model of car, the year, and how much overall risk is involved in insuring it. But you can easily get a quote ahead of time for a car you have in mind. It's a great way to predict what your costs are going to be on a monthly or bi-annual basis from here on out.

Gas Mileage

As gasoline prices fluctuate with the ebb and flow of the economic climate, it's difficult to predict what gas is going to cost three or four months out from now. What you can predict is how much gas your newly purchased vehicle is going to consume on a daily basis, depending on your route. Factoring in your car's consumption of gas, as well as best and worst case scenarios in terms of gas price changes, is a great step in anticipating its true cost to own.

Maintenance

Let's face it, all cars eventually begin to wear and tear.

Keeping them safe to drive and in tip-top shape can mean shelling out a chunk of change for parts and labor when you least expect it—sometimes more, sometimes less. The origin and make of a particular car can make a big difference in the cost of fixing or replacing parts, so be sure to consider that when picking out your new baby.

Depreciation

Depreciation is a decrease in the value of your car due to wear, tear, and time. A wise car shopper understands that the value of a car drops as soon as it's purchased and driven off of the lot. If you're looking forward to a good resale value later on down the road, just be aware that a new car will lose 15–20% of its value each year that you own it. Perhaps last year's model is looking a little better now, after all.

Financing

Finally, one of the most subtle costs of owning a car that can make or break the bank are the finance charges. The difference between a low and high-interest rate can add up, especially over the course of five or six years. If you play your cards right, come to the table with a good down payment, and find the best rate possible, you can end up saving yourself hundreds, if not thousands, every year on borrowed money for your next ride.

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Opinions expressed by the author are not necessarily those of WITI.