When you get ready to buy a car, there are quite a few important decisions to make. Will you need a small, fuel efficient car for commute, a family vehicle, or a truck? What is your budget? What color do you prefer?
Once you have decided which vehicle you desire, discovering what you are able to afford can seem to be more than a bit complicated. You might be able to get car payments that are affordable, but the costs do not begin and end with a car payment.
You will also have other costs that can include car insurance, registration fees, number plate and other accessories, fuel, and yearly car insurance renewals.
Before you start car shopping, it is a good idea to take a quick look at some of these costs just to make sure they don’t catch you off guard.
You will need to have insurance before you drive the car off the lot. This is especially true if you are financing your car. You don’t have to take the first insurance policy that you come across, though.
You can slash your monthly bills easily by checking around to compare prices for your car insurance. Just make sure that you are comparing similar coverages. Also, be sure to only get the coverage you need and don’t go overboard with it.
Let’s say you are buying a new car. Most of the time, you will need to have at least 10% down payment if you will be financing it.
You might have average credit and will be financing the car for a period of 5 years. One of the hidden costs of owning a car that is financed is the finance charges themselves.
The overall amount that you will pay would depend on your credit score, how long the loan is for, the amount you are financing, and what your down payment is.
Does your car require premium or regular petrol, diesel, CNG (unless of course, you are going for hybrid or electric)? What kind of mileage does it get? What is the usage of the car? What are the kind of roads you will be taking the car on? All this will impact your monthly fuel bills.
It can be easy to overlook tires. That is until you need new ones.
Tires that have a warranty that is good for 60,000 miles will typically need replacement on a 4-year basis if you drive roughly 15,000 miles each year. This would be on top of the price that you will pay for the tires themselves, and their installation.
Repairs and Maintenance
Do you know what is the cost of maintenance that would be recommended by the vehicle manufacturer? This includes things like regular servicing, tire rotations, oil changes, testing, and battery inspections.
Beyond that, what types of repairs might be necessary and what will their cost be? What breakages are not a part of the insurance? How much can that cost?
Fees and Taxes
These costs include things like local and state taxes, registration and title fees, license costs, and other fees.
If you look at data online, you will come to find that the single biggest expense for owning a car has to do with depreciation. In the first year alone, a vehicle can lose as much as 20% of its value. That is for new cars.
The prices of used cars are more heavily influenced by supply and demand and as such, they can depreciate even more rapidly during those times when the market gets flooded with off-lease and used cars for sale.
As you can see, there are quite a few hidden costs to owning a car and you will need to take all of them into account when you get ready to buy one.
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