Before making a purchase, you should consider all of the pros and cons of owning a car. Since there are numerous costs associated with buying a car, it's a good idea to consider the entire picture before making a move. For starters, why do you need a car? Do you need one to get back and forth to work? Did your old car break down? Will you be moving anytime soon to a place where you will not need a car? Questions such as these will help you make a wise decision about car ownership.
The True Cost of Ownership
Have you considered the following other costs associated with owning a car? Most people consider gas and insurance but what about maintenance? In many instances, maintenance can cost as much as $50 a month. Things like oil changes, car washes, tune-ups, minor repairs and new tires can all add up. Depending on the repair type, in a single month you can pay as much as $500 or more for a single repair. This amount can go up if the car is older.
Have you considered the cost of insurance? If not, you should as most states require you to have it. Your insurance costs will vary depending on your age, driving record, number of drivers, type of vehicle, type of coverage, distance driven, where you live and other factors. In fact, depending on where you live, you may pay more for insurance. For instance, if you live in region where auto theft is high, you will pay more than in regions with low auto theft rates. Generally, living in a city will have higher insurance premiums than suburban and rural areas. On average, you can expect to pay as little as $100 or as much as $500 or more per month.
If you live in the city, have you also considered the cost of parking? Can you park on the street or will you need to pay for monthly parking at a garage? If you wanted to attend an event someplace in the city, is it cheaper to take a taxi versus paying for parking at the event location? If your answer is yes, you may find yourself leaving your car parked more frequently than you drive it. If you live in the city, these are all real costs that you may have to pay in addition to your other auto costs.
Depreciation
Cars depreciate from the moment you drive off the parking lot, and its value will continue to diminish every year thereafter. In fact, most cars will lose 30 to 40 percent of their original value within the first three years. After that, depreciation rates will go down to 6 to 9 percent each year. This rapid loss in value usually doesn't pose a problem until you are ready to sell or trade your car in. Then you find out that you owe more than the car is worth. Thus to get a newer car, you will have to add on to the new car the amount you still owe on the second car. This is why it pays to research the car before you buy it. You want to know just how well the car retains its value and how rapidly you can resell it without losing too much money.