If you are looking for a new car in the coming year, there is much more to think about in terms of cost than just the sticker price. If you do not take into account the associated financing costs, taxes, insurance, depreciation, petrol and maintenance, you will only get a partial picture of the actual cost of driving a car. According to AAA, the cost of car ownership during the year was $ 9,282 or $ 773.50 per month. That's 5% more ̵
One of the main reasons for the costs? Financial charges, as AAA says, average about 40% of total costs.
“An important contributor to the increase was a large jump in financing costs. Rising federal interest rates and higher vehicle prices drove an increased finance charge, which increased by 24% in 2019 from $ 744 to $ 920. It comes when long-term loans become more common. Such loans offer lower monthly payments, but in the end they cost the consumer more, which means that car buyers pay more and longer for vehicles that lose value when they are sold.
Although long-term loans may seem cheaper, AAA says they ultimately cost more consumers. They estimate that on average every 12 months added to the life of a loan yields nearly $ 1,000 in total financial charges.
Another important cost factor is that when new cars are equipped with more technology to make driving safer and more comfortable, maintenance and repair costs increase. Sophisticated sensor in bumpers means that a simple splash guard may require a costly replacement and recalibration of sensors. See our previous post about high-tech cars that correspond to high cost repairs.
Because cars can be such a big budget item, it may pay to do research research to make sure you make the best purchase and consider factors other than just the sticker price. Here are some car buying tools to help you predict and calculate the total cost of ownership for different makes and models.
Talk to your insurance agent!
Another source for keeping the annual cost of a new car down is to talk about car insurance options with your insurance agent. Make sure you take advantage of all available discounts, such as discounts for safe drivers, low mileage, seniors, good students and more. In addition, bundling your car and homeowners policy with an insurance company can provide discounts on both.