True Cost of Car Ownership
I was visiting with a parent about the difficulty he was having justifying to his kid, the choice of car that was purchased for this new driver in his household.
The true cost of owning a car includes much more than what it takes to drive the car off the lot. I'm talking about depreciation, interest on your loan, taxes and fees, insurance premiums, fuel costs, maintenance and repairs. The annual maintenance cost can vary widely from car to car but there are a few rules of thumb.
- The more expensive the car, the more it usually costs to maintain.
- The more bells and whistles your car has, the more things that may need repaired.
- Less popular cars will become more expensive to fix because there will be fewer parts available to fix them.
Car manufacturers often make available at the time you purchase the car, a prepaid maintenance plan. Before you sign on the dotted line, make sure you understand what it includes. The service manager of the dealership can give you a list of scheduled maintenance and their cost. Add these costs up and compare it with the price of the plan to determine if the maintenance plan is the better deal.
In the end, I reminded this dad that he did not OWE his child a car and that the child need to be reminded that it is a privilege to drive and use the car...not a right. How have these conversations with young drivers gone in your home?
For more information on car ownership, check out Owning a Car: Money Mechanics.
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