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Cost of Owning a Car

Cost of Owning a Car

There are many costs associated with car ownership that extend past the initial sales price of the vehicle.

By Gary Smith (Contributing Author) | Published on July 28th, 2021 | Last Updated on
By Gary Smith (Contributing Author)
Published on July 28th, 2021. Last Updated on .

Purchasing a car can be a big investment if the car you want has a large price tag. With newer cars coming with the latest and greatest technology, car prices have skyrocketed over the years. While the base price of a car will give you the upfront cost of the vehicle, there are several things to take into consideration when looking at the overall cost of owning a car.

We have put together a list of the most popular car ownership costs to give you a better idea of what you should take into consideration before purchasing a car. Even the best of deals can come back to cost you more in the long run if you are not careful. Let’s take a look at some of the most overlooked costs of owning a car.


Depreciation is the rate at which your vehicle loses its value from when you first purchase the vehicle. The value of your car will actually drop in value as soon as you drive it off the lot in most cases. Depreciation is going to affect both new and used cars and depending on the vehicle, the depreciation rate can be greater or smaller than others. While this is not something you will have to immediately pay, if you plan on selling your vehicle in the foreseeable future, it will be a cost you incur over time when compared to the price you paid for the vehicle.

Luckily, there is a way to calculate the depreciation of a car using an easy math formula. All you have to do is calculate the difference between the price you paid from the average resale value. You can use KBB for resale values, but it is important to take into account the current condition of the vehicle. Divide the difference by the price you paid, multiply by 100, and you get the percentage of depreciation your vehicle currently has. In rare cases where a vehicle increases in value or the market is paying higher for used vehicles, you may not see as much depreciation as you may think. For highly sought-after vehicles, such as collector cars, you may see an increase in value with zero depreciation.

Insurance Premiums

When you purchase a vehicle, you will be required to purchase insurance. If you are financing a vehicle, it will be mandatory that you get full coverage insurance. If you purchase a car and pay it in full, you can choose to get liability insurance. Full coverage is going to cost more due to the comprehensive coverage that you get compared to liability insurance. Insurance policies can cost anywhere from $50 up to $300+ per month depending on the vehicle, the type of coverage you get, and your recent driving history. If you have had speeding tickets, accidents, or other blemishes on your driving record, your insurance company may consider you a higher risk for reckless driving, making your insurance more expensive. When looking at a vehicle to purchase, always check with a few insurance companies to get quotes to ensure you can afford not only the car payment but the insurance payment that goes with it.

Maintenance & Repairs

Another vehicle cost that many people do not think about is the maintenance and repair costs that your vehicle will accrue over the years of ownership. Repairs such as suspension component replacement, battery replacement, and engine problems can add up quickly. While there is no way to know what repairs you may face, there are resources that you can use to get some insight into problems faced by owners of the same vehicle.  Always check over common problems, technical service bulletins, and recalls of the vehicle that you are looking at purchasing to make sure you will not have to face unforeseen problems throughout your ownership.


If you are financing your vehicle, there are finance charges that will come with purchasing your vehicle. Financing a vehicle refers to a bank or credit union giving you a loan for the full amount of the vehicle at a certain finance rate to allow you to get the car and pay it off monthly. Most vehicle loans are going to have a certain APR percentage in which you pay interest. Interest, or the finance charge, is the way the bank or credit union makes money on your loan. To ensure you are getting the best percentage possible and pay the least amount in interest, you will want to have a good credit score. This shows the financial institution that you are responsible with your money and are very low risk when it comes to paying your loan off.

Other Costs of Vehicle Ownership

There are a few other expenses that you should take into consideration when it comes to owning a car. State registration fees are a great example of a yearly fee you can count on paying each year you register your vehicle. This will vary state by state, so check with your local DMV to see what your current state registration fees are. Tires are another maintenance item that can add up over the years. Tires are not the cheapest and only increase in cost with larger and more uncommon sizes. Most tires are going to last around 50,000-70,000 miles on average, so you can expect to pay for tires every 4-6 years with normal driving. Lastly, you may want to consider how you will be using the vehicle on a daily basis. For instance, if you are needing a truck for hauling and rougher conditions, you will want to purchase a truck that is made to do just that. Getting a fully loaded, luxurious truck for a company truck that will be used on a worksite can end up costing you more money over time as the fully-loaded features are not built for rougher use.

In conclusion, there are many different costs associated with car ownership that extend past the initial sales price of the vehicle. Make sure to take everything into consideration when deciding whether or not the vehicle you are purchasing is going to be the best financing decision for you.

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