The real cost of owning a car
Take into consideration these factors before making a car purchase.
October 31, 2014 - Author: Kathy Jamieson, Michigan State University Extension
For many people, including teenagers, a first step toward independence is having his or her own vehicle. This milestone affords a person the ability to get to where they need (or want) to be without relying on others for transportation.
Before taking this step however, do people actually take the time to research the cost of owning their own vehicle? There are several factors to take into account when considering buying a car. Beyond just the purchase price, there needs to be an awareness of things such as maintenance, insurance and the ever-increasing cost of gasoline.
According to Consumer Expenditures in 2013, released in September of 2014 by the U.S. Department of Labor's U.S. Bureau of Labor Statistics, the average vehicle costs $9,004 per year to own and operate. The breakdown of that calculation is made up of $3,271 for purchasing the vehicle, $2,418 in gasoline and motor oil expenses and $3,315 in other vehicle-related costs.
The American Automobile Association also compiles statistics on the cost of driving in its annual Your Driving Costs report. It summarizes the operating costs (gas, maintenance, tires), ownership costs (full-coverage insurance, license, registration, taxes, depreciation and finance charges) and total cost per mile for a variety of vehicles.
Ways to minimize your driving costs
Regardless of how much you spend on your car each year, less is always better. The operating and ownership costs of driving a small sedan are likely to cost in the neighborhood of 59.5 cents per mile, based on 10,000 miles per year, versus 97.5 cents per mile for a large sedan. This is a difference of 38 cents per mile. If you drive 10,000 miles per year, this is a difference of $3,796 annually!
In the same vein, don't pay for an eight-cylinder engine with a lot of “power” when four cylinders will work just fine. The extra cost of a bigger engine results in more money spent on gasoline. Whatever you are driving, make a conscious effort to drive it less frequently. Walking or biking to local destinations is good for your health and good for your budget.
It is also worth your while to explore whether public transportation goes to the places that you need to be. Buses, trains and subways all provide relatively inexpensive alternatives to driving yourself. Car pools are another great option. Owning a car, doesn't mean that you always need to drive it. Taking turns with a friend can save you money and save wear and tear on your vehicle.
Regardless of how you get from place to place, you need to pay attention to how much you are spending overall to own your vehicle. This includes ancillary costs, such as car insurance and regular maintenance. By keeping an eye on your expenses, you can keep more money in your pocket.
To learn more money saving tips, visit Michigan State University Extension. Here you will find many resources, programs and articles on money management and personal finance for both youth and adults.