Cost of Car Ownership on the Rise
The American Automobile Association has released its annual ‘Your Driving Costs’ study. The study shows a 1.9 percent increase in the cost of owning a car. This translates to an average cost of $8,946 per car per year, which includes things like fuel, maintenance, insurance, and finance repayments.
This news is not entirely surprising, given the rise in fuel costs over the last year. Pump prices are up almost 15% since last year’s report. The cost of tires has also risen 4.2%, an increase mainly caused by a rise in the cost of raw materials.
The findings in the AAA report were based on a driving cycle of 15,000 miles a year.
Used cars are holding more of their value, depreciating by 5% less than the previous year. This means that both new and used cars are holding their value better than before.
The AAA report shows that the most cost effective choice of car is a smaller sedan. Compact car models average only $6,735 per vehicle, which is significantly less than the average cost of $8,946.
Unsurprisingly, SUVs are at the upper end of the range, costing $11,360 per year to run. Large sedans aren’t far behind, with an average cost to run of $11,324.
What can you do to keep costs down?
There are a few steps you can take to get the most bang for your buck when buying a car. The AAA report shows that you need to be mindful not just of the upfront costs, but also the cost of the car over its lifetime.
Here are some tips on keeping costs down:
Do your research before buying a car. Using our research tools, you can work out how much a new or used car will cost to run by checking its fuel usage and other specifications
Be mindful of running costs when using the car. Various things can add to your car’s fuel consumption. Try to use air conditioning sparingly (this will be better for the environment as well as your bank balance). Also try to keep the weight load on the car to a minimum in order to save on fuel as well as lowering stress on the car. Been lugging that set of gym weights around in your trunk for a few weeks? Maybe it’s time to move them to the garage!
Keep your car maintained. If you haven’t had a tune up for a while it could be costing you up to 25% more in fuel costs. The same goes for replacing parts like the air and oil filters. Frequent oil changes will extend the life of your engine, and a dirty air filter can shorten your car’s life.
Use the right fuel. Don’t use higher octane fuel than your car’s user manual recommends. Higher octane fuel cost 10-15% more than regular fuel for no actual benefit.
Check your tire pressure regularly. If your tires are under-inflated it could be costing you as much as $400 per year in excess fuel costs.
Finally, make sure you have the most cost-effective insurance. Many people are paying far too much for their car insurance. Shop around and use comparison tools to find a better deal. With just a little time and effort you could be saving a lot in the long run.
Follow these simple tips and you’ll find the cost of buying and owning a car can be much less than you anticipated.