When buying vehicle, look at how much it
will cost to own
You've driven a hard bargain and gotten a good price
on the vehicle you just bought, but do you know for sure that those
upfront savings won't be eroded by the cost of owning the vehicle?
Obviously, if a car costs more to maintain or guzzles
more gas than a similar make and model with a slightly higher sales
price, your initial savings may be devoured by these subsequent costs.
Costs of ownership for similar class vehicles can vary by thousands
of dollars, yet consumers often overlook the lifetime costs of owning
and operating a vehicle as they search for a good deal on the initial
"How do you get a handle on that?" asks
James Bragg, a consumer advocate and author of The
Car Buyer's and Leaser's Negotiating Bible, pointing out
the many factors that affect how economical a vehicle is to own
You have to consider more than fuel or repairs, Bragg
"The biggest cost of owning a car is the difference
between what you pay for it when it's new and what you get for it
when you sell. Some cars drop like a rock while others hold their
value really well."
When looking at how economical a vehicle is to own
and operate, many consumers do tend to look at out-of-pocket operating
costs like fuel and repairs rather than fixed costs like depreciation,
says Joe Wiesenfelder, an automotive expert at Cars.com.
" Buyers should always consider the cost
of ownership, but the fixed costs should be the main concern, he
says. It's not unusual for a vehicle to depreciate $10,000 in three
years, yet it would be unusual for you to have operating costs close
to that, especially during the warranty period."
There are resources that can help. Intellichoice.com puts out two CD-ROMs,
"The Complete Car Cost Guide" and "The Complete Small Truck Cost
Guide," that provide cost-of-ownership information for each model year. They
show the five-year costs of depreciation, financing, insurance, state fees, fuel,
maintenance and repairs. The total of these costs is compared
to the average total costs of ownership of vehicles in its class.
cost of repairs listed in these reports can be taken as an indicator of a vehicle's
reliability or dependability. However, some very reliable cars may cost more to
repair at each visit because their parts cost more than other cars in its class,
Butler points out. That's why you might want to take a look at the J.D. Power
and Associates Vehicle Dependability Study each model year.
a bit of a correlation between depreciation and reliability, Bragg says. Cars
that don't need much in the way of repairs tend to hold their value better than
cars that aren't so reliable. Yet some of those very reliable, value-holding vehicles
may cost more to insure because they may also be among the most-stolen vehicles,
No one suggests that a consumer can plug these
factors into a matrix to come up with an absolute answer. In the end, weighing
the importance of these costs depends on personal circumstances and preferences.
For instance, Bragg says that safety is his first consideration, and safety is
a factor whose value each individual must determine. It won't show up in anybody's
list of ownership costs.
Even when considering
measurable costs, "you're going to have to determine which is going to be
more of a factor for your wallet," Wiesenfelder says. "If you do a lot
of driving, you're going to want to look at fuel-economy costs, but for most people
that is not the biggest cost. It's things like insurance: If you have a vehicle
that's on the most-stolen list, then insurance could be a huge differential."
are plenty of resources online to help. Here are some good ones:
Edmunds.com has a display of the True Cost to Own, which is
information on the additional costs involved, not only in a vehicle purchase but
also in the ownership. For instance, there is always fuel, maintenance and repair
costs awaiting the car buyer.
presents top 10 lists of residual values from Automotive Lease Guide, most frequent
theft claims from the Highway Loss Data Institute, and its own 10-best and 10-worst
vehicles for fuel economy. In addition, it presents J.D. Power and Associates'
Dependability Study going from most reliable to least reliable.
Intellichoice.com publishes its "Best Overall Values of the Year" list
in six vehicle classes: cars over $24,000, cars under $24,000, SUVs over $30,000,
SUVs under $30,000, trucks over $27,000, and trucks under $27,000. For instance,
the site picks the 2004 Toyota Avalon XLS four-door sedan as the best overall
value in cars over $24,000. The cost of ownership is figured on a five-year basis,
and the approximate costs of depreciation, financing, insurance, state fees, fuel,
maintenance and repairs are listed. The total of these costs is compared with
the average of the total costs for other similar vehicles. In the case of the
Toyota Avalon XLS, the five-year cost of ownership would be $33,074. The average
for similar vehicles would be $37,093. So the Toyota would offer a savings of
$4,019 over five years.
- You can also search
Intellichoice.com for the costs of ownership of specific vehicles and how those
costs compare with the average costs of other vehicles in its class. The site
also allows you to make side-by-side comparisons.
your research well, and you'll know whether that manufacturer's rebate is a good
deal or just an invitation to pour money down the drain after you take delivery.
-- Updated: Jan. 20, 2005