If you own an auto, you may not know the true cost of ownership. Cars are expensive to own; you have to pay the purchase price, plus insurance, maintenance costs and an ever-rising fuel cost. These expenses can add up, but most people don’t know just how much it costs to own a car.
According to the Department of Labor’s Bureau of Labor Statistics, the average American pays over $8,000 to own and operate a car per year. That number is broken down as follows: just over $3,400 for the purchase, about $2,200 in fuel and oil, and almost $2,400 in miscellaneous costs. As you may already know, vehicle spending is closely related to income, and the most well-to-do in America spend over fifteen thousand dollars per year on their vehicles.
The American Automobile Association also compiles cost-of-ownership information, and according to them, the average American spends almost $9,700 per year to drive (based on an average fuel cost of $2.26 per gallon, and not including parking costs). That’s about $10 per day just to make a 20-mile round trip, or about fifty dollars per five-day work week. In cities where there are bus lines, a yearly pass can cost less than $800.
If you’re buying a new car, you probably know that you’ll have to pay the suggested retail price, with extra charges for options, taxes, as well as title and tag fees, which can vary depending on where you live. Taxes are usually more expensive than tags, which can cost anywhere from $20 to $50. The taxes and title fees are non-negotiable, but you won’t have to pay the price the dealer quotes you if you do your research and are ready to bargain.
If you are financing your car, that will make up a significant chunk of the total cost of ownership. It’s essential that you get loan quotes from a variety of sources. Having a few competitive quotes will ensure that you get the lowest rate possible; it’s no longer necessary to settle for the higher rates that dealers normally provide.
Insurance is perhaps the biggest recurring cost of car ownership other than a monthly payment. What you pay for insurance will depend on what kind of car you drive, your driving record, and where you live, as well as whether or not you purchase collision insurance. Those that live in big cities will end up paying more than someone driving a comparable car and living in a more rural area.
Gas prices are on the rise, making fuel a bigger expense for car owners. Depending on where you live, what type of car you own, and how much you drive, it can cost you upwards of $50 per week just for gas. Maintaining your car can add up too; with oil changes, tires, mechanical work and inspections, it can easily eat into your budget.
Those planning to purchase hybrid vehicles should beware of hidden costs as well.
When they were first introduced, critics were saying that hybrid repair costs would be prohibitive. This hasn’t been proven to be true. The hybrid specific components in these cars are covered for a minimum of 8 years and/or 100,000 miles, depending on your state. According to testing done under extreme conditions, these components are lasting for as much as 180,000, according to 1 manufacturer.
Besides an air filter on one model of hybrid, maintenance is not an issue. Everything required by a hybrid is also required by gasoline only vehicles. One thing that has been noted is that the regenerative braking systems used to charge the hybrid’s batteries allow the brakes to operate much cooler, which greatly increases the life expectancy of them. There have been reports of owners going as long as 80,000 miles before requiring brake pad changes. Compare this to an average of 35,000 miles with a traditional car.
There are a number of rebates and tax credits available to owners of hybrids. Some of these are listed here. There are also other private incentives listed here. With a hybrid, you will also experience much lower fuel costs due to the increased mileage you will get.
As you can see from this article, there really aren’t any increased costs of hybrid ownership. The only real exception to this statement is the initial purchase price. Hybrids run from $1700 to about $11,000 more than their gasoline only versions. In short, the financial advantages outweigh the disadvantages with hybrid ownership.