People who say owning a vehicle is a huge responsibility are not lying. It’s one of the largest expenses you’ll ever have in your life. Based on the data, they’re not getting cheaper either.
How Much Does Your Car Cost You?
Vehicles are one of those expenses that force you to think beyond the purchase price. For one, you need to spend for their repair and maintenance. You also have to shell out money for fuel and even a few upgrades.
According to the 2018 report by the American Automobile Association (AAA), the car ownership cost in the United States for the year was $8,849. This is about $400 higher than the average spending the previous year. Depreciation still takes the largest share. It’s about $3,000 a year.
Many factors, however, can affect the actual car ownership costs. Take, for instance, the type of vehicle. Based on the report, small sedans have the lowest possible expense at no more than $7,000. Meanwhile, pickup trucks could burn more than $9,000 of your savings.
It can also differ among the states. GoBankingRates.com revealed that in the first year of your vehicle, the costs will be higher if you’re living in Georgia or Kentucky than in Illinois. There, the average is $20,758.
Car insurance premiums would cost you about $1,004 a month. Experts in car insurance in Aurora can bring this number down by helping you compare the premiums among providers.
Think Resale Value
The cost of car ownership can also go up (or down) according to the vehicle’s resale value (RV). It refers to its potential price in the market.
RV can also depend on factors such as demand or market trends. For example, you are likely to lose more if you own a sedan than an SUV or a truck today. This is because the need for bigger vehicles is growing.
It means that even if the car ownership costs can be higher for these vehicles, you can still look forward to a potential profit or even break even when you consider selling them.
How to Spend Less on Vehicle Ownership
As a car owner, you have two silver linings. One, vehicles these days are more durable and reliable. In fact, the average age of vehicles on US roads is already 11 years old.
Second, depreciation, which is the highest expense of all, can go down over the years. This means you can preserve much of the vehicle’s value over time.
You might also spend even less with these following tips:
- Follow the maintenance schedule of your vehicle. Repairs can be costlier if you don’t pay attention to the car’s potential issues.
- See to it car ownership costs should not be more than 20% of your take-home pay on car expenses, including maintenance.
- Strive to buy your vehicle at 20% or more down payment. It can significantly bring down your monthly repayments within the next few years.
- If you want to buy a used vehicle, get the most expensive one that you can afford. There’s a good chance this car is in mint condition and has features the market loves to have.
Cars these days are a necessity than a luxury, but they don’t need to break the bank. By being more familiar with the average ownership costs, you can budget your income more effectively.