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5 min read Published 15 September 2022
Written by Allison Martin Written by
Allison Martin’s career began more than 10 years prior to that as a digital content strategist. Since then, she’s been published in numerous prestigious financial media outlets, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances with concise, well-researched, and well-written data that break otherwise complicated topics into bite-sized pieces.
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While the sticker price of a car can guide you to the brand and model that’s right for you, it’s not the only cost you should keep in mind before purchasing the vehicle. Maintenance and repairs, fuel automobile insurance, as well as annual registration renewals need to be considered when deciding which vehicle is most suitable for your budget and needs. How to estimate the true costs of car ownership calculate the actual cost of car ownership it is necessary to take into consideration several factors, including repairs and maintenance fuel costs and registration fees. You also have to consider fees, taxes and car depreciation. When you conduct your research prior to time, you won’t be blindsided by the plethora of costs and you’ll know that you’re able to pay for the vehicle you’re driving off the lot. Repairs and maintenance scheduled maintenance will cost you less than $100 per visit, but the price can be higher for older vehicles. You can determine the an average cost based on your car’s make, model and mileage. While today’s cars can go for a long time between maintenance appointments scheduled regularly, it’s a bad idea to stretch the time between maintenance visits in order to save a few dollars on car maintenance costs. It is recommended to adhere to the maintenance schedule in your owner’s manual to ensure the longest life of your car . Also, make sure that the manufacturer can’t void your car’s warranty. Car insurance Although the majority of states do not have their drivers purchase insurance for their cars, for the majority of drivers it is an important consideration when calculating the true price of owning a vehicle. Car insurance could help you save tens of hundreds of thousands in case of collision and the average motorist has to pay . The best way to determine the cost of your insurance by comparison of quotes from various companies. The price of your insurance may vary according to your age, your history of accidents as well as your annual mileage or gender, your vehicle, and more. Gas costs The price at the gas pump varies due to demand, taxes and even the location. However, as a prospective car buyer, you can prepare for the anticipated cost by analyzing the fuel efficiency of your vehicle on . It is estimated that a « good » gas mileage for non-hybrid vehicles is around 20-30 miles per gallon. On the other hand, electric and hybrid vehicles can reach 50-100 miles per gallon, or more, according to . Also, you should consider the fuel octane and type of fuel needed. A high-performance vehicle will require higher-octane premium gasoline, which could influence your monthly budget. However, you can save on gas by shopping around for the most affordable prices before making a stop at the gas station. Taxes, registration, and fees When you buy a car, there will always be additional charges when you’re ready to take the final step of signing the agreement. The main three are the cost of registration for the vehicle, the documentation fee and sales tax. The registration fee varies by state. In some states, registration fees are under $100 per year, however, other states cost closer to $200. That cost can also be determined by the price and age of the vehicle. The documentation fee covers the documents that come with the purchase of a new car. Many dealerships use this as a way to make extra cash. Certain states set a fee that ranges from $100 to $200, however, the majority of states don’t regulate the fees for documentation. Be sure to check your state’s regulations prior to time so that you are prepared to negotiate if that number is too steep. Sales tax also varies depending on the state. The residents of California will pay to pay 10.25 percent tax on their vehicle while buyers in Michigan are taxed at 6 percent. Calculating the tax rate of your car can help you avoid surprises when signing the contract. Depreciation Your is the amount at which the value of your car decreases over time. It reveals the difference between the value of your vehicle now compared to when you first purchased it. It’s a significant factor since you may be losing money if you own a vehicle with a high depreciation rate. can help you determine the rate of depreciation for potential vehicles over the course of five years, since some cars depreciate faster than others. The general rule is that new cars appreciate faster than older cars. How to minimize your vehicle costs Along with researching before you sign the contract There are a variety of everyday ways to reduce your vehicle costs once the car is yours Don’t drive too fast and accelerate too fast: Speeding, speedy acceleration and sudden braking can all reduce your vehicle’s fuel efficiency. Following the speed limitor a little less than is a good way to save money at the pump. Pick a reliable mechanic: Shop around with a few mechanics, and check reviews on the internet before choosing one. Having a relationship with a trustworthy mechanic will result in fair pricing. Follow the maintenance schedule: It’s tempting to skip regular maintenance and visits to the service center, but following the manufacturer’s recommended schedule will stop your vehicle from crashing. In addition, you may save money on repairs. Take a defensive driving course: Many insurance companies provide discounts to drivers who have completed online defensive driving training. Don’t overdo the air conditioning using your car’s air conditioning when not needed could significantly impact the fuel efficiency. If you can, roll down the windows instead of cranking up the temperature. Shop around for auto insurance Some companies offer more affordable rates on auto coverage than others. Take the time to research and search for the option that is best for you. Consolidate your route: Mapping your routes in advance can reduce unnecessary trips, curbing expenses for fuel. Earn rewards for gas Make use of loyalty reward programs available through select credit card issuers and gas stations. Experts suggest that you invest not more then 10-15 percent of take-home pay for an auto loan. Also, you must consider the cost of maintaining the vehicle, which shouldn’t exceed more than 7 percent which would make the total between 17 and 21 percent of take-home salary. How can you save money from your auto loan Finding a loan the can also aid in reducing your car ownership costs. Before you start your search, look over your credit score to see where you stand because lenders use it to determine what rate to offer you. In the event that your score isn’t up to standard, request a copy of your credit report from the three largest credit bureaus which include Experian, TransUnion and Equifax and look over the details. Make a dispute if you notice mistakes and pinpoint any areas on your credit report that have to improve which could affect your credit score down. If your score isn’t quite up to par and you need to get a car loan now, is also a potential option. After that, you should get rate quotes to find the best deals on financing. A lot of lenders allow online financing without affecting your credit score. Moreover, you can use rate quotes to help you negotiate a purchase price at the dealership. When you are ready to apply for an loan make sure you choose the lender with the terms that will allow you to sign the contract. Remember that the longer the loan term, the more interest you will pay, even if you get an affordable monthly installment. The end result is that car maintenance, insurance and additional fees could put you in a tough financial position if you’re prepared for these costs. Be prepared and review your budget to ensure that you can afford the vehicle you’re looking to purchase. Be sure to verify this before you apply for a loan to get the best deal on financing. Find out more
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Written by
Allison Martin’s career started over 10 years ago as a digital content strategist, and she’s since published in numerous prestigious financial media outlets such as The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to control their finances by providing precise, well-researched and well-documented information that breaks down complicated subjects into digestible pieces.
Auto loans editor
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