How to Estimate Auto Costs
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If you’re going to buy a new auto, costs are going to have a large impact on what you decide to buy. Car cost estimates are a great way of researching exactly how much a given car is going to cost over you the period of ownership. There are a number of other smaller costs that add up to make what is known as the total cost of ownership of a car. This article will list some of the many different costs that together make up the cost of ownership. The costs will then be described quickly:
- Invoice price
- Dealer installed options
- Taxes, license, other dealer fees
- Routine maintenance
- Depreciation
Invoice Price
This is what the dealer pays to buy the car from the factory, plus any fees that aren’t listed separately. Many times you can have the dealership remove any fees dealing with delivery of the vehicle since the factory will normally reimburse them for those charges. Types of fees that may be added to dealer actual cost to come up with the invoice price are as follows:
- Transportation or delivery fee
- Fees to pay for cleaning and detailing
- Addition of floor mats
- Installation of hubcaps
The last 3 are usually grouped together under the catch-all “Dealer Prep Fees”.
Dealer Installed Options
Any options packages installed by the factory will be accounted for in the price the dealer pays as part of the invoice price. Anything that the dealer adds on after delivery is known as dealer installed options. A partial list of possible dealer installed options follows:
- Extra white or bright headlamps or fog lamps
- Premium audio systems
- Keyless entry/remote start/security systems
- Sirius satellite radio
- GPS/Navigation systems
- High output or capacity electrical systems
Dealer Documentation Fees
Fees such as registration, taxes and inspections, among other things required with every sale are usually lumped together under documentation fees. These fees are non-negotiable since they are set by the state you live in.
Routine Maintenance
Routine maintenance covers everything that must be done to the car to keep it in optimal running condition. Some of the maintenance items are as follows:
- Oil Changes-Intervals for this depend on driving conditions and the type of oil you use. Full synthetic oils will give longer life and change intervals.
- Tune-ups-For most cars, this is once a year and entails changing spark plugs, air and fuel filters and checking the ignition timing is equipped.
- Belts and Hoses-Over a typical 3 year vehicle lifespan, belts and hoses might require changing once.
- Tire Rotation-This is recommended every 5,000 miles.
- Suspension Alignment-This should be done every 15,000 to 20,000 miles.
- Tires-Replace as necessary. Might be once in a 3 year vehicle ownership time span.
- Fuel Costs
Depreciation
This is the loss of value of the vehicle which occurs over time. There are formulas to calculate this, but they are beyond the scope of this article.
In order to come up with total car pricing quotes, you need to add the various costs of ownership.
