The Real Cost of a Car

Owning your own car can be great and give you an incredible sense of independence but cars create a significant expense that is often simply accepted. Along with your car payment comes high gas prices, maintennance and the occassional trip to the mechanic for a tune up. If you take a close look at all the costs of owning your own car, you may be getting more than you bargained for.

Misleading information encourages people to believe automobiles are less expensive than what they actually are. How many times do you see ads for a car dealership stating that you can own a car for just $149 a month without stating the taxes, licensing and registration of the car. This misleading information encourages public spending to be applied to automobile transportation over other means.

Cars rarely increase in value over the years and it is estimated that the value of a new car depreciates by 20% as soon as you drive it away from the car lot.

Depreciation is not something most people think about when they’re choosing a new car and nor should it be. But depreciation is one of those hidden costs of car ownership. The Automobile Asociation (AA) divides car costs into two distinct areas, standing charges and running costs.

Standing charges

Standing charges are the costs you incur even if your car sits on your drive and doesn’t move an inch the whole year. These include depreciation, finance you’ve borrowed to pay for the car, road tax, insurance and any breakdown cover.

Running costs

Running costs are what you pay out through everyday use of the car. They include gas and oil, tires and new parts and servicing and maintenance.

It is important to take a close look at your budget before buying a car. These hidden caosts are very real yet rarely mentioned when you are in the process of looking for a vehicle. It is a good idea to do some research on the types of cars that get better mileage and are rarely in need of major ongoing repair. A little research up front can save you a lot of money in the long run!

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