Buying a car, whether you’re getting a new one or a used one, can be pretty exciting. In fact, it can be so exciting that many people overlook how much their vehicle is really going to cost them on a day-to-day and monthly basis because they’re just thrilled to be purchasing a new car to drive.
Unfortunately, buying the wrong car can result in a lot of extra expenses that you may not have thought about before the purchase. If that happens, you’ll end up with a thin checking account and a constant source of stress.
Use this guide to help you understand the hidden costs that often come with buying a vehicle so you can make the right purchase for you and your family.
Most people don’t think of the fact that the car they are purchasing will go down in value pretty much as soon as they drive it off the lot. Once you buy a car, you’ve got a used car, and even if your vehicle has low mileage, you can’t sell it as new again for a new car price.
That means that when you consider buying any sort of vehicle you need to look at the depreciation rates on the car. For example, some high end vehicles, while luxurious, lose a great deal of their value as soon as you purchase them or shortly afterward. Other economy cars tend to hold their value a little bit longer.
To figure depreciation costs, take a look at models that are a few years old on the used market and compare their average selling price to what they sold for new. You’ll find that some cars are a better investment than others when it comes to depreciation.
The days of incredibly affordable gasoline are over. If you’re going to be buying an all-gas vehicle, you need to make sure that you aren’t paying a fortune in gas each month or that you’re comfortable with the high fuel charges because you need the vehicle’s size or horsepower.
If you don’t want to pay high fuel charges, you need to consider an economy car with a smaller engine, which is often ideal for city driving. Four-cylinder cars are often your best bet in the city if you’re buying a car that runs entirely on gasoline.
However, new hybrid cars that run on both gasoline and an internal battery are often a much better bet, even if they cost a bit more in the beginning. They are more beneficial if you drive a lot within the city.
Just make sure you compare the money you’ll save over the first few years of owning the car versus how much more a hybrid vehicle will cost you in comparison to a standard vehicle of the same size and style.
If you choose to buy a car with a car loan or you lease a car, you also need to factor in how much money you’ll be paying in interest. While interest rates are obviously variable, you’re still going to be paying more money on a car that costs a lot.
When you’re deciding what car to get, you need to figure out how long the car will take you to pay off and what your total payments in interest will be. It’s not abnormal to have thousands of dollars or even more in interest payments over the life of a car.
Just make sure you can afford whatever interest rate and payments you’ll have to deal with each month and year.
You need basic insurance coverage that protects other drivers, but if you’re buying a new car or leasing, you really need insurance that protects your investment too. Comprehensive coverage can be expensive, especially on high end cars.
Make sure you check and see how much your insurance will cost you with your make and model of car before you buy. You don’t want to be surprised and find out that comprehensive insurance costs several hundred dollars per month more than you thought it would.
Regular Maintenance Costs
Unless you lease your car, you need to consider the fact that you’ll have repair and maintenance costs. On expensive cars, simple tasks can be quite expensive. Talk to a mechanic or check online to get a glimpse of how much basic maintenance will cost you when you need to have them done.
Understanding how much major repairs can run will also be beneficial to you.