For most people their auto loan or lease payment is their second biggest monthly expenditure. And, over the course of the loan or lease, many of the additional costs of ownership, such as fuel, maintenance, repairs and insurance can easily eat away at a budget that wasn’t prepared for them. The biggest mistake people make with their car purchase is not factoring in the total cost of ownership which can increase monthly car-related expenditures by as much as 25%.
- Insurance costs: Add 5% to 12% depending on age, type of car, new or used, and driving record
- Maintenance and repairs: Add, on average 10% to 15% per month (less if your car includes a pre-paid maintenance program)
- Fuel costs: Can be as much as 30% higher per month if switching to a less fuel efficient car
- Registration: Only an annual expense, but it still manages to catch many people off guard. Amortize your fees over the year. $5 to $25 per month.
You can lower your monthly auto expenditures by selecting a newer model, fuel efficient car with a highly rated safety record, and by maintaining a clean driving record. Cars that include free maintenance checks may sell at a slight premium, but the total ownership costs could be less.