How Much Will That New Car Really Cost?
As auto buyers, we often get caught up solely on the purchase price of a new car. We’re so concerned with the initial outlay of cash or the monthly payment, that we don’t think about the long-term picture. An extensive study by Consumer Reports shows that there is much more to think about when auto buying than the number on the bill of sale.
Reliability is a very popular buzzword for automakers to trumpet, but in reality, maintenance and repair costs are the least of your worries. Of far more significance is the cost of depreciation. Essentially, that is the resale value of your car, and it is, by far and away, the number one ongoing expense of owning a vehicle. So much so that the car you saved a couple grand on at purchase, winds up costing you thousands more than the initially more expensive alternative.
Over 5 years, on average, depreciation makes up nearly half of the ongoing costs of owning your vehicle. Repair and maintenance costs make up only 4%. Clearly, resale value is the area for consumers to concentrate on over reliability.
Coming in at second place, fuel costs make up about a quarter of your ongoing expenses. But odds are if you’re shopping within a particular category of vehicle, the gas mileage difference won’t be great enough to cause too significant a variation over time.
Instead, as Consumer Reports found, look at insurance costs before you buy. That is one area where you may find some significant differences between comparable vehicles, particularly if you’re in a higher-risk category (sorry, young single men).