The True Cost of Owning a Car

Costs of owning a car

When it’s time to buy a car, the heart often leads the way. After all, what you drive can affect how you feel. A sports car makes you feel youthful, daring and fun loving. A sedan? Think safe, steadfast and sensible. Go ahead and listen to your heart, but also be aware of the true costs involved.

Unless you pay cash, you know you’ll be paying interest on that car loan. You also know what kind of gas mileage a particular car gets. But there are plenty of other expenses to keep in mind.

1. Depreciation

How much value will the car lose every year? Typically, new cars lose 20 percent of their value the first year. Used cars? It’s complicated. For used cars, depreciation rates fluctuate with the economy and popular models tend to depreciate more slowly, depending what’s in fashion in any particular year.

2.Insurance Premiums

Cost of insurance depends on many factors including make and model of the car, your driving record, where you live, commuting distance, amount of coverage, and deductibles.

3.Loan Interest Rate

How much interest are you going to pay on your car loan? Rates are determined by such factors as your income and debt load, your credit score, amount borrowed, down payment made, car’s age, and length of the loan term.

4.Taxes, Fees and Registry Costs

These expenses vary state-to-state. State taxes differ, for instance, and registry costs are calculated by the state based on things like type and weight of the vehicle, what year the car is, and sometimes the age of the driver (the older you are, the lower the fee you’ll pay). If you own an alternative fuel vehicle you’ll get a federal tax credit.

5.Maintenance and Repairs

How much will all scheduled maintenance, outlined in the car’s owner’s manual, set you back? Also consider projected costs for repairs common to the particular make and model.


What are projected fuel costs for the car? The answer will depend on what kind of fuel required (regular, premium or diesel) as well as what the miles-per-gallon estimate is for the vehicle.

For more information about the true costs of owning a car, read How Your Car Affects Your Premium.


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