How much does it cost to own a car?

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While the sticker price of a car will guide you toward the make and model that’s right for you, it’s not the only price you need to keep in mind before purchasing. Maintenance costs play a large role in the car’s overall cost, as well as car insurance, gas expenses and taxes.

How to estimate the total cost of car ownership

To estimate the total cost of car ownership, you’ll need to take into account many factors, including maintenance and repairs, car insurance, gas expenses, registration, fees, taxes and car depreciation. By doing your research ahead of time, you won’t be blindsided by the laundry list of fees and will know that you can truly afford what you are driving off the lot.

Maintenance and repairs

Scheduled car maintenance can cost less than $100 per visit, though that price will rise with older cars. Edmunds’ car maintenance calculator can help you determine average costs based on your car’s make, model and mileage.

While today’s cars can go 5,000 miles or more between regularly scheduled maintenance visits, it’s a bad idea to stretch the time between car service visits to save a few dollars on car maintenance costs. You should always follow the manufacturer’s car maintenance schedule found in your owner’s manual to get maximum life out of your car and ensure that the manufacturer can’t void your new car warranty.

To avoid paying for maintenance you don’t need, always compare your mechanic’s or dealer’s recommendations to the items listed in the car maintenance schedule in your owner’s manual. That way, you can safely say no to any service that is not recommended by the manufacturer.

Finally, make sure that your receipt details each and every service that was performed to your car, as well as the date and mileage on the car. Keeping these receipts will help you should you ever find yourself in a warranty claim situation with the manufacturer. It can also help your car sell quicker, since it shows any future buyer how well you’ve taken care of your car.

Car insurance

Although not all 50 states require their drivers to purchase car insurance, for most drivers it is an important consideration when calculating the true cost of car ownership. Car insurance can save you tens of thousands of dollars in the event of a collision, and the average driver pays around $140 per month.

The best way to determine your auto insurance costs is by comparing quotes from a few companies. Your insurance rate varies based on your age, accident history, yearly mileage, gender, vehicle and more, so take your time and shop around for the cheapest car insurance option for you.

Gas expenses

The cost at the gas pump varies due to demand, taxes and location. But as a car buyer, you can prepare for the expected cost by looking at your car’s fuel economy on FuelEconomy.gov. Fuel economy is how far a tank of gas can get you; the more miles covered per gallon, the better the fuel economy.

Car and Driver’s research shows that a “good” gas mileage for nonhybrid cars hovers around 20 to 30 miles per gallon, while hybrid and electric vehicles can get closer to 50 to 100 miles per gallon or more.

You should also consider the fuel octane and type of fuel needed. A high-performance vehicle will require higher-octane premium gas, which could influence your monthly budget.

Registration, fees, taxes

When you buy a car, there will always be additional fees that are added once you are ready to sign off on the contract. The main three are the vehicle registration fee, documentation fee and sales tax.

The registration fee varies by state; in some states, registration costs are under $100 per year, but other states charge closer to $200. That cost could also be influenced by the price, age and weight of your vehicle.

The documentation fee covers the paperwork that comes with a new vehicle purchase. Many dealerships use this fee as a chance to get extra money. Some states impose a documentation fee limit of $100 to $200, but many states do not regulate documentation fees. Check your state’s rules ahead of time to be prepared to negotiate if that number is too steep.

The sales tax also varies by state. Residents of California can expect a maximum 10.25 percent tax on their car, while buyers in Michigan have taxes capped at 6 percent. A car tax rate calculator can help you avoid surprises when it comes to signing the contract.

Depreciation

Your car’s depreciation is the rate at which it loses value over time. It shows the difference between how much it is worth now compared to when you first purchased it. It’s an important factor because you could be losing money if your vehicle has a high depreciation rate.

Edmunds’ cost of car ownership calculator can help you determine the depreciation of potential vehicles over a five-year time span, since some cars depreciate faster than others. In general, new cars depreciate faster than used cars.

How to minimize your vehicle costs

Along with doing your homework before signing a contract, there are many day-to-day things you can do to minimize your vehicle costs after the car is yours:

  • Don’t drive too fast: Speeding, rapid acceleration and sudden braking all lower your car’s gas mileage. Driving the speed limit – or slightly below – will help you save money at the gas pump.
  • Pick a reliable mechanic: Shop around with a few mechanics and look at online reviews before choosing one. Having a relationship with a trustworthy mechanic will ensure fair costs.
  • Take a defensive driving course: Many insurance companies offer discounts to drivers who successfully complete online defensive driving courses.
  • Don’t overdo the air conditioning: Using your vehicle’s air conditioning when not needed can dramatically impact its fuel economy. When it’s feasible, roll down the windows instead of cranking up the air.

Key takeaways

Maintenance costs, insurance and added fees can leave you in a tough financial spot if you’re not prepared for them, so plan ahead to make sure you that can truly afford the vehicle you’re purchasing. Along with that, it is always a good idea to check current auto loan rates before entering negotiations, since a low interest rate will help you save money over time. Create a budget that factors in all of your ongoing costs so you’re ready to start making payments once you drive off the dealership lot.

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Written by
Rebecca Betterton
Auto Loans Reporters
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase a car.
Edited by
Student loans editor