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Spoiler Alert: Owning a car costs far more than your monthly car payment. Before you select your next vehicle, use the tips and advice from the Yoder Chevrolet finance department to calculate the total cost of owning your next vehicle.
Adding up all of the typical expenses of owning your next vehicle is the best way to make sure it aligns with your monthly and annual budget. Once you have a full picture of the cost of ownership, then you can decide if you can spring for massaging seats, a HEMI V8 engine, or a rear seat entertainment system.
So, how much does it really cost to own a car?
Short answer: Add up the cost of the vehicle, the cost of financing, insurance premium, average fuel cost, registration fees, and the cost of maintenance and repairs.
Long answer: Keep reading for a detailed breakdown of everything you’ll need to know to make an educated decision about purchasing a new vehicle.
Monthly car payments are generally the primary expense car buyers use to decide if it’s affordable. As of this writing (August 2023), the credit reporting agency, Experian, reports that the average new car payment is $725. Of course, your vehicle may not cost as much. You can save money by opting for a more economic option like a Chevy Malibu or Trailblazer.
Once you know how much the car costs to buy just add it to your budget and see if it balances out. It’s simple. You have to pay for the car and that’s it, right? Not so fast. Embedded in your monthly car payment is also the cost of financing, which is a great opportunity for you to save money.
The interest on your loan makes up a huge chunk of the cost. For instance, if you’ve purchased a vehicle for $30,000 with a 60 month term and a 6% interest rate, you’ll need to tack on another $4,799.04. That’s an extra $179 a month. To cut down on the cost, shop around for a car loan with the lowest interest you can qualify for. You may be able to significantly lower your monthly payment.
Having to pay for a car you no longer have would suck. A lot. Fortunately, there’s car insurance with perks like gap insurance that will pay off the car for you in case of an accident. Plus, the state of Colorado requires car insurance for you to operate a motor vehicle. The cost of insurance depends on your driving history, the value of the vehicle, the coverage you choose, and other factors.
Get a few quotes from reputable insurance agencies to add insurance to your monthly cost calculations.
Gas prices rise and fall with the seasons, the market, supply, and sometimes it seems like it just shifts because the wind changes. Because it’s such a wild fluctuation, fuel cost is hard to nail down. However, the American Automobile Association estimates that most people pay around 18 cents a mile for fuel. The average American drives about 15,000 miles a year. That means most people spend $2,700 on fuel each year or $225 a month. If you want to save on gas, there are several gas price apps that will let you track the cost of gas at gas stations in your area. Just make sure you’re not taking on more mileage to get to a station with a lower price.
Taxes and Fees on a vehicle depend on the make and model of the car as well as the state and sometimes city it is registered in. Look up the cost of fees and registration in Colorado to find out exactly how much you’ll pay on your vehicle. If you’re looking for a quick estimation, the average car owner pays $675 a year in taxes and fees.
Keeping your car in pristine condition costs money. How much? According to Bankrate, the average American spends between $370 to $786 in maintenance cost a year. So you’ll need to set aside $31 to $66 a month for maintenance.
There you have it folks. You can use this information to calculate the total amount that you’ll pay for a vehicle. Use that information to decide which vehicles will match your budget. Then, visit us at Yoder Chevrolet to find your next vehicle.