Motoring Finance

The Cost of Running a Car

D o you want to buy a car? The good news is that the current economic climate is favorable for this. If you are considering acquiring a vehicle, this is the ideal time to evaluate all the costs and establish a realistic and complete budget. Be aware, however, that a car remains an expensive commitment.

Indeed, the purchase of the vehicle itself represents only the initial investment to which we must the add the maintenance and operating costs. Follow the guide to discover all these fixed and variable costs, and finally find the car that suits your budget.

What Is The Average Price Of A Car?

The average price of a new car in America has gone up to $4500, which is pretty high and not everyone can so easily afford it. 

Before buying a new car, it is important to familiarize yourself with the true reality of a car’s cost. A new car loses at least 20% of its value as soon as it leaves the dealership. And it doesn't stop there; new cars continue to lose 10 to 15% of their value each year. After four years, your car has therefore lost an average of half its value.

Of course, new cars are much more expensive than used cars. But this is the price of your peace of mind. By buying new, you make sure you have a perfectly functioning vehicle without any hidden defects. However, if you decide to opt for a used car, you can make a good deal and often save thousands of dollars.

Does This Mean That It’s Better To Buy A Used Car?

It depends! Buying second-hand offers you more negotiating margin and allows you to avoid the discount, but there are other factors to consider. You may find that maintenance and insurance costs are much higher. But again, it all depends on the car chosen.

Overall, the figures suggest that buying a new car is interesting if you want to keep it for a long time because the annual cost of owning it decreases significantly every five years.

Calculate The Total Cost Of Ownership Of A Car

That's it, you have found the car of your dreams and you have something to buy. But have you estimated its annual cost? Here is a list of post-purchase expenses to be included in your budget:

Vehicle Registration Certificate

Formerly called a "registration card", it is the vehicle's identity card. Its price varies according to several factors: the type of vehicle, the age of the vehicle, the fiscal power, the CO2 emission rate, and finally, your place of residence. It ranges from 30 to 50 dollars or above for electric vehicles to even higher for more conventional vehicles.

Car Insurance 

For insurance costs, the best way to save money is to compare the offers of competing insurers. However, this is one of these expenses, which varies according to your place of residence and age, especially if you are under 25 years old. According to a study, the average cost of car insurance in America is around 139.5 dollars per month.

Car Financing Fees

Financing fees are the fees you pay on your car loan or leasing if you do not buy your car right away. Depending on the amount of your deposit, the duration of your loan and your actual credit, you will have to pay an average of around $4000 per year in financing costs. Thus, while lower monthly payments for a car loan can be tempting at first glance, they can entail significant costs in the long term!

Maintenance, Repair And Tire Costs

There is some good news. If you choose a new car, you probably won't have a repair fee in the first few years. The two-year manufacturer's warranty should cover you in the face of any unforeseen expenses. If you opt for a used model, the maintenance costs of your car will average around 1000 dollars per year, but can very quickly rise if the vehicle has a number of years on the meter. It is strongly recommended to provide a monthly budget for repairs, especially if your car is not covered by a warranty.

Regardless of the number of kilometers driven, it is advisable to replace tires every six years (if local regulations do not already require you to change tires each season). 

Additional Maintenance Costs

With the increase in fuel prices, the cost of using a car per kilometer increased again. The average monthly fuel budget is around 90-100 dollars and so. 

To estimate the amount you will have to pay each year in fuel, you must take into account factors such as road conditions, the price of gasoline in your area, and the consumption of your vehicle. Do you know how many kilometers you travel each month? Divide this figure by the fuel consumption of your car, then multiply it by the price of gasoline per litre.

You now know the factors to consider when calculating the total cost of a car. Now find out how to establish an adequate budget to achieve your goal. So, that’s all you need to know about the cost of running a car!

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  • Car Maintenance
  • car finance
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