How Much Does A Car Cost? Calculate The Real Expense Of Car Ownership
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You've got the car. Money has changed hands. It wasn't cheap, but it didn't matter. This is going to be your main mode of transportation for years to come. But have you thought about how much your new ride will cost you in the long run?
The sticker price is just one part of owning a car, and before you make a purchase, it’s vital to consider how much you’ll spend over its useful lifetime.
Fuel costs money. So too does insurance and maintenance. Unless your car is under warranty, you’ll have to pay out for any repairs required. And there’s also deprecation — how much value your vehicle loses over time.
This article will guide you through the various costs associated with owning a car. We’ll also give you practical tips on how to minimize them, helping you save money at the pump and on insurance and repairs.
In 2021, the average cost of a car insurance policy hit $1,674, or $139.50 per month. Americans spend around 2.44 percent of their annual income on this, and it’s a figure that’s risen steeply over the past few years, growing by almost five percent in the years between 2017 and 2018 alone.
It’s also completely unavoidable. Almost all states, save for New Hampshire and Virginia, require drivers obtain a policy before hitting the road.
Fortunately, reducing the cost of your premiums is simple. Perhaps the most obvious step is to be a safe driver. If you have a history for speeding, or you’ve recently been in an accident, you’ll find your monthly costs rise when it comes to renewing your policy.
Similarly, a good credit history will help when taking out car insurance. As a general rule, insurers rely on credit reports to determine the risk posed by a potential customer. They perceive those with manageable levels of borrowing and no missed payments to be a safer bet, and less likely to make a claim. Obtaining a copy of your credit report before buying a new policy is a sensible bet, as you’ll be able to address any potential issues.
The make and model of a car can also determine how much you’ll pay each month. The actual figure depends on several factors. These include the cost of repairs, any included safety features, and how many other drivers of the same car have been in an accident.
Other factors are more immutable. In many states, insurers can charge different rates based on gender. Your age will also play a role, with younger, inexperienced drivers charged more than those with several years behind the wheel.
The cost of fuel varies from state-to-state. At the time of writing, the most expensive state for a gallon of regular gasoline was California, with an average pump price of $4.279. Drivers in the Magnolia State enjoyed the lowest prices, with Mississippians paying just $2.739.
Fuel prices regularly fluctuate, as we saw during the early months of the pandemic. In April 2020, with shelter-in-place orders enforced across the US, the average US price of a gallon of regular unleaded hit $1.77, the lowest level since 2016.
As a result, it’s hard to place an exact dollar figure on how much the typical driver would spend each month. There is simply too much variation. However, you can compare the relative fuel burn of different cars to pick the most economical option.
The EPA fuel efficiency ratings are useful here. These represent the typical miles you can expect to drive from a gallon of fuel on city and highway roads. The EPA also provides a combined rating, designed to represent a mix of the two. Vehicles with higher MPG ratings (such as hybrids and compact cars) are cheaper to drive, whereas those with lower ratings will require you to spend more time (and money) at the pump.
To get a ballpark figure of how much you can expect to spend on fuel each month, divide the amount of miles you plan to drive by your prospective car’s combined EPA rating, and then multiply it by the typical price per gallon in your area.
Things are a little bit more complicated when we talk about electric cars. Drivers can opt to charge at a public station, or plug their vehicle into a power outlet in the garage. These cost different amounts, and you will pay significantly more for the convenience of a Tesla Supercharger than when drip-feeding juice to your vehicle from your house’s AC supply.
You will also find that electricity costs vary nationwide. Consumers in Hawaii often pay four times as much per kilowatt hour as those living in states like Washington and West Virginia. Nonetheless, regardless of where you live, electric cars are generally cheaper to own than their gas burning equivalents.
As the saying goes, prevention is better than a cure. Cars require regular maintenance in order to prevent costly repairs later down the line. At the bare minimum, this means regular oil, filter, brake fluid, and plug changes.
Less commonly, you can expect to replace your tyres every 20,000 to 30,000 miles. Even before that point, you should periodically check to ensure there’s enough tread to ensure traction when driving. Driving with bald, worn, or bulging tyres is dangerous. Other parts that periodically need replacement include the windscreen wipers and the car battery.
On average, Americans spend around $500 each year on maintaining their vehicles. As a general rule, the older the car, the more you are liable to spend on maintenance. Still, this is money worth spending, as it limits the amount you will need to spend on repairs later down the line. You can reduce the sting of many of these tasks by performing them yourself. Changing your own oil is always cheaper than paying someone else to do it.
It's also worth noting that some cars require less periodic maintenance than others. Electric cars, for example, do not require spark plug or filter changes. There is no oil to replace. You will still need to replace the brake fluid and brake pads from time to time, although the use of regenerative braking limits this to an extent.
This is another major cost of owning a car. Eventually, either due to natural wear and tear, or the result of an accident, your vehicle will break down. The actual cost will vary dramatically between the component that requires replacing, and the make and model of your car.
According to the AAA, the typical cost of replacing a timing belt is between $400 and $900. An alternator will set you back between $400 to $600. New brakes can cost $500.
If you own a luxury car, which uses expensive components, or an exotic model where parts are hard to find, these costs can spiral dramatically.
You can mitigate against this by ensuring whatever car you have is backed by a warranty. Some used dealerships provide optional repair plans, which cover some of the most costly repairs you’re liable to encounter during the period in which you own a vehicle. Shift’s protection plans, for example, will cover defects with the engine, electrical systems, and suspension (to name just a few).
For added reassurance, Shift offers a variety of competitively priced vehicle protection plans designed to keep your car looking and running its best for years to come. From engine issues to back-up cameras, these big-ticket items can run hundreds or thousands of dollars out of pocket. Shift’s protection plans are also good at any dealership nationwide to ensure you don’t get stuck with the whole bill wherever you go.
And you can protect yourself further by choosing a car known for its reliability. Some vehicles, like the Toyota Prius and Hyundai Kona, have a reputation for being hardy and long-lasting. Others, less so.
Electric cars are less susceptible to wear-and-tear, largely because despite the high-tech exterior, they are simple beasts. Motors are fundamentally less complex than a combustion engine. If you aren’t quite ready to make the change, you can reduce potential repair costs by choosing a manual car, which typically have less complicated transmission designs than automatics.
2017 Toyota Prius Prime Premium (from $23,650)
Deprecation isn't often factored into the cost of owning a car, but rather a fact of life. You only really feel its sting when you try to upgrade to a new model. Still, it is something worth considering.
Not all cars lose value at an equal pace. Sports cars, for example, lose almost half their value five years after the initial purchase. There are a few reasons behind that phenomenon. They are expensive to insure and repair, and few are suited to day-to-day driving (like the school run, or the commute).
Others, less so. Electric vehicles, particularly Teslas, hold their value well. They’re desirable, certainly, but they’re also relatively “future proof,” with many new car features delivered as software upgrades. It also helps that Tesla is currently struggling to meet demand, and as such, the only way to buy one with any degree of immediacy is through the used market.
At the moment, figuring out the depreciation rate of a car is fiendishly tricky. A shortage of semiconductor components has dramatically limited how many new vehicles car manufacturers can produce. As a result, used car prices have skyrocketed into the stratosphere. Still, this phenomenon won't last forever, and historical trends can give you a clue about the potential future resale value of your next ride.
2019 Tesla Model 3 Standard Range Plus (from $42,500)
Owning a car isn't cheap. Figuring out how much it will cost you requires meticulous research. These costs vary on a state-by-state basis. Those living in comparatively expensive places, like Hawaii or California, can expect to pay more than someone living in Tennessee or New Hampshire.
Moreover, the actual cost will be influenced by the car you ultimately pick. Here, you have to walk a delicate tightrope. You may find that some vehicles have low maintenance and repair costs, but are shockingly expensive to insure. For others, the opposite is true.
When doing this research, a good place to start is Shift. When browsing our massive inventory of cars, you'll find information about fuel efficiency and a vehicle’s accident history, as well as other technical details that will prove useful when choosing your next vehicle. They’ll even help you find financing.
All Shift cars are thoroughly inspected by a team of trusted mechanics before sale, and are backed by a no-questions seven-day returns policy. And when choosing from our certified lineup, you get the added peace of mind of a free 30-day warranty.
2013 Kia Soul (from $8,500)
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All prices are based on vehicle availability and pricing as of
April 15, 2022
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