A car is a symbol of liberty and independence. It enables you to travel whenever and wherever you want, without regard for public transportation schedules or rideshare costs. However, owning a car entails a significant financial commitment that many people overlook when deciding to purchase one. In this article, we’ll look at the true cost of car ownership and offer some advice on how to budget for vehicle expenses.
The Unknown Costs of Car Ownership
Depreciation
A car is a depreciating asset, not an investment. According to Edmunds, once you drive a new car off the lot, it loses approximately 20% of its value. It could lose up to 30% of its value by the end of the first year. This can add up to thousands of dollars in lost value over time.
Insurance
Car insurance is required in most states, and the cost varies greatly depending on a variety of factors such as your driving record, the type of car you drive, and the coverage options you select. Car insurance costs an average of $1,000 per year in the United States.
Maintenance and Repairs
Regular maintenance is essential to keep your car running smoothly and safely, but it can also be costly. This includes things like oil changes, tyre rotations, and brake replacements. In addition, unexpected repairs can quickly add up, especially as your car ages. According to AAA, the average cost of car maintenance and repairs is about $1,200 a year.
Fuel
Fuel costs are another significant expense of owning a car. The average American spends about $1,400 a year on gasoline. This can vary depending on how much you drive, the fuel efficiency of your car, and the price of gas in your area.
Parking and tolls
Parking fees and tolls can also add up, especially if you live in a city where parking is limited and expensive. According to a study by INRIX, the average American driver spends about $3,000 a year on parking and tolls.
Tips for Budgeting for Vehicle Expenses
Determine your true costs.
To accurately budget for your vehicle expenses, you need to know how much you’re currently spending. Start by tracking all of your car-related expenses for a few months, including gas, insurance, maintenance, and repairs. Use this information to create a realistic budget for your ongoing costs.
Consider All Costs Before Buying
Before purchasing a car, it’s essential to consider all of the costs associated with owning it. This includes not just the purchase price but also insurance, maintenance, fuel, and parking fees. Make sure you can afford all of these expenses before making a purchase.
Plan for maintenance and repairs.
It’s important to plan for regular maintenance and unexpected repairs by setting aside money each month in a separate savings account. This can help you avoid unexpected financial stress when your car needs repairs.
Choose a Fuel-Efficient Car
Choosing a fuel-efficient car can significantly reduce your ongoing fuel expenses. Consider the cost of gas when making a purchasing decision and choose a car that will be affordable to drive.
Take advantage of discounts.
There are many discounts available that can help you save money on your car-related expenses. For example, some insurance companies offer discounts for safe driving, and some gas stations offer rewards programmes that can help you save money on fuel.
Conclusion
Owning a car is a significant financial commitment that requires careful budgeting and planning. By considering all of the costs associated with owning a car and taking steps to reduce those costs, you can enjoy the freedom and independence that come with vehicle ownership.
