Owning a car is expensive. It doesn’t matter if the car purchased is brand new or pre-owned—the owner is bound to shoulder many costs after he or she drives off the vehicle from the lot. If you are about to buy a car, find out first all the expenses that come with car ownership. Knowing these will help you determine if you can truly afford to make the purchase.
Unless you will be buying the vehicle in cash, car payments will be a major expense for you. This is the main expense of most car buyers, those who don’t have the large amount to pay the purchase price upfront and thus require financing. Paying through an auto loan is more manageable because it stretches out repayment over a long period of time, but it is more costly. Interest raises the price you have to pay considerably.
Make sure you can afford the loan payments of the car you choose and that you have a financial cushion should anything happen that will render you unable to make payments (i.e., job loss). If you don’t honor your auto loan and make payments on time, you will lose your car and your credit will suffer.
This is another expense, but a very important one: it serves as protection against theft, property damages as well as costs that come with personal bodily injuries. Depending on the state, car insurance may be required. Oregon is one state that requires every driver to have his or her vehicle insured through their mandatory insurance law.
Auto insurance comes with different coverage levels, such as liability, collision and comprehensive. You must consider coverage level when you choose an insurance policy, but sometimes the coverage levels you need are set by the state. As with Oregon, their insurance law requires bodily injury and property damage liability, personal injury protection and uninsured motorist coverages for specific amounts.
Your insurance costs are influenced by a number of factors. These include age, gender, marital status, the place where you live, driving record and driving routes.
Fuel costs are another thing you have to prepare for when you buy a car. Fuel prices may be low right now, but they constantly fluctuate. You need to anticipate price changes and brace yourself should prices jump considerably in the future.
If you want to reduce future fuel costs, choose the car you will buy wisely. Some vehicles use less fuel than others.
License and registration
Just like car insurance, license and registration are required by law. The cost of these vary from one state to another. For instance, Oregon sets the regular title fee for regular vehicles at $77.
Maintenance and repair
You may be buying a car in good condition, but don’t expect it to stay that way. With time and frequent use, the vehicle is bound to have problems. To stay in great shape, the car needs routine maintenance and repairs.
Routine maintenance costs are something you as a car buyer can prepare for, since the services come with a recommended schedule. These services include oil changes, tune-ups and replacement of parts like batteries, tires and windshield wipers.
On the other hand, repair services are often unexpected. Warranty will cover repairs for a time, but you will be shouldering all expenses once it expires. Repair expenses can be pricey, so you should save up for a fund that will cover these if repairs are needed in the most inopportune times.