When you think about how much your new car costs you, you might simply be thinking about how much you actually paid for your new car when you walked out of the car dealer.
But this amount really is only just the beginning to what a new car is going to cost you or what you are going to ultimately pay for having your car.
Remember, what you paid for your new car and what that car costs you are two entirely different numbers… but they both come out of your pocket.
Basically there are but two different areas that cost you when it comes to car ownership… there is the cost of ownership and the cost to operate it.
Ownership Expenses:
The cost of owning a car is really not related at to the number of miles that you drive the car (unless this would affect your insurance premium). When it comes to being the proud owner of a car… the cost meter keeps running even if you don’t put many miles on your car at all in the form of depreciation, licensing and registering, insurance, and finance charges.
Financing the car is something that the overwhelming majority of people do when purchasing their new car and more often than not there will be an interest rate associated with the financing charge.
Other fees associated with owning the car are licensing and registration. The amount of these fees charged by your local government agency is usually in line with the make and model of the car along with how old the car is. But make no mistake, this is a cost of ownership that you must pay.
And speaking of government agencies being involved, don’t forget to determine what your annual property taxes will be for your new car… luxury taxes could even come into play depending upon where you live and the type of vehicle you may be looking at.
Insurance is another recurring cost of ownership that you need to get a handle on when your trying to figure your monthly budget. Many people get hit harder than they thought on this one especially when the upgrade from that old clunker to shiny new model and find that there cost to insure their new car is substantially more out of their pocket.
Depreciation is the silent killer when it comes to the cost of ownership in a new car. Without question deprecation is the single biggest cost to owning a car. Even though you don’t have to make a monthly payment against the cost of depreciation, rest assured, it is a very real cost.
Operating Expenses:
Most of us have no trouble at all with this concept… gas, oil, tires, maintenance, repairs, etc. Unlike the ownership expenses, these operating expenses are more directly tied to the number of miles that you drive annually.
It’s important to keep a record of all your operating costs of your car. If don’t keep track of all the fuel, the maintenance and repairs, then you really have no way of knowing (or budgeting for) what your car is actually costing you. Plus, it’s important to have a good idea of what your annual driving habits are costing you. This is a very important number to know when you are doing your research prior to buying any new car because it play such a vital role in your monthly budget and what you can ultimately afford to buy.
So, remember… what a car costs you is not what you paid for the car. Be sure to do all your homework and get all the research done on any make and model you may be considering before you head out for the test drives.
About the Author
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