The True Costs of Owning a Car
When you’re thinking about purchasing a car, the sticker price is usually the first thing that comes to mind. Cars are expensive, even one that is used or an older model. But the cost of a vehicle doesn’t end there. In fact, once you factor in things like gas, insurance, and maintenance, the true cost of owning a car can be much higher than you initially thought. Here are some of the hidden costs of car ownership.
1. Gasoline
Cars need gasoline to run, and gas prices constantly fluctuate. Depending on the make and model of your car, you can expect to spend anywhere from $30 to $100 per month on gas.
However, switching to an electric vehicle (EV) might not lead to savings, either. Unlike gas, the cost of electricity to charge an EV is much less stable. One state might charge less for electricity. For example, in California, residents pay 18 cents per kilowatt hour. But in Idaho, people are only charged 8 cents per kilowatt hour. Your savings when you have an EV depend highly on where you live.
2. Insurance
Another cost that is often forgotten about is insurance. To drive legally, you need to have insurance. The insurance price will depend on various factors, such as your age, the make and model of your car, and your driving history. But on average, you can expect to spend around $1700 per year on car insurance.
In case you are in an accident, car insurance will cover the cost of repairs to your car. And if you’re at fault for the accident, car insurance will also cover the cost of repairs to the other driver’s car.
You should also get a health insurance policy that covers car accidents. This will help to cover the cost of any medical bills if you’re injured in an accident. If you don’t get the necessary coverage, a car accident attorney can help you get the compensation you deserve.
3. Maintenance
Another cost to consider is maintenance. Cars need regular tune-ups and oil changes to keep them running properly. You can expect to spend around $100 per year on new tires, brake pads, and other general maintenance.
If your vehicle breaks, you’ll have to shell out more money. For example, fixing a blown engine can cost thousands of dollars. And if you’re not mechanically inclined, you’ll have to pay someone else to do it for you.
4. Depreciation
A car is an expensive investment, but it is one that you might not get a lot out of in case you want to resell it in the future. Cars depreciate as soon as you drive them out of the dealership. In fact, a new car can lose up to 20% of its value in the first year.
And it doesn’t stop there. A car will continue to depreciate until it is no longer usable. This means that if you want to sell your car, you might not get as much money as you initially paid for it.
5. Parking and Tolls
If you live in a city, you know that parking can be difficult and expensive. You might have to pay for street parking or park in a garage. The cost of parking can add up, especially if you’re paying for it daily.
Tolls are another hidden cost of car ownership. If you live in an area with toll roads, you will need to pay a fee every time you use them. Tolls can range from a few dollars to over $100, depending on how far you’re traveling.
6. Financing
If you don’t have the cash to pay for a car outright, you will need to finance it. This means you will have to take out a loan and pay interest on the borrowed money. The average car loan is around $27,000 and has an interest rate of 4.21%. This means that you will end up paying around $2900 in interest over the life of the loan.
7. Time and Emotional Costs
The last cost to consider is the opportunity cost of owning a car. If you’re spending time driving, you’re not doing something else. You might be working or spending time with your family. Time is a precious commodity and one that you can never get back.
Owning a car also comes with emotional costs. If you’re stressed out about making a car payment or dealing with car repairs, it can take a toll on your mental health.
Of course, there are also many benefits to owning a car that should be considered as well when weighing the pros and cons. Ultimately, the decision of whether to own a car is a personal one that depends on your specific circumstances. But it’s important to be aware of all the potential costs involved so that you can make an informed decision.
