What Is the Cost of Car Ownership?
While owning a car is convenient and often necessary, buying a new or used car is just the start of an ongoing investment in mobility. There are many tools available to help you evaluate how much you can plan to spend per year while owning a car and build in other variables like car payments, insurance, and possible additional fees.
Common Car Ownership Costs
The initial sticker price of a new or used vehicle is only the start of your financial investment. If you aren’t paying cash, you’re automatically going to pay through interest. Buying a car with cash offers plenty of benefits, though it won’t help young drivers build a healthy credit score.
Aside from monthly payments, you’ll also need to invest in other monthly or recurring expenses, such as:
Car insurance
License and tab renewals
Gas
Regular maintenance
There is also the chance of costly emergency repairs. Regular tune-ups and preventative maintenance can reduce the risk of unexpected breakdowns.
How to Calculate the Cost of Car Ownership
Calculating the monthly or annual cost of maintaining a car has many variables. To get started, grab the information for the following recurring costs:
Car payment (check your interest rate, too)
Insurance costs (if you pay biannually or quarterly, add up the annual total and divide by 12)
Annual license registration, taxes, etc. (and divide by 12)
Repairs – Plan on approximately three oil changes per year and roughly $400 on repairs
Look at your most recent bank statement to determine how much you spent on gas.
Have all the information handy? Use this Car Ownership Calculator from NerdWallet.
What is the Average Cost of Car or Truck Ownership?
According to AAA, the monthly cost of owning a car was roughly $894 for vehicles driven 15,000 miles a year. That includes depreciation, loan payments and interest, maintenance, and other associated fees.
A car payment is a massive chunk of the monthly cost of a car. The average monthly payment on a new car was $667 in 2022, and that number is expected to increase, and interest rates will rise in 2023 and beyond. This will make owning and maintaining your current vehicle a wise financial decision. It’s cheaper to keep an older car than make payments on a new one.
Keep Your Family Moving with Garfield Auto
For more than 40 years, we’ve helped keep Northern Michigan families on the go with reliable automotive repair services at a fair price. We work on all makes and models, foreign and domestic, and have a team of experienced technicians who always treat you like a friend. Schedule your next car repair with us.