To a lot of people, owning a new car represents many important things in life: independence, adulthood, convenience and a validation of success. But in addition to the many wonderful aspects new cars bring, they’re also quite the expenditure, and we’re not even talking about their initial price tag.
Let’s break down all the costs and fees many people don’t realize buying a new car brings below.
Unless you can pay for a vehicle with cash, you’ll have an auto payment plan, which will be structured depending on the amount of money you put down. Pay more up front and set up a shorter loan length to save on interest payments if you can afford it. Fortunately, new cars carry lower interest rates than used cars. Always make sure you’re comparing loan plans with the same down payment, loan terms and interest rates though, otherwise it’s impossible to make the right decision.
New car owners typically pay a uniform sales tax to the city, county and/or state they live in, regardless of where they bought the vehicle. Examine taxes and laws in your area to be sure you’re getting the best deal you can get. Keep in mind that less expensive cars will carry lower tax rates.
No matter the vehicle you own, there’s no escaping auto insurance premiums. Premiums will vary greatly across states, but generally, if you’re over 25, have a good driving record and credit history, drive a reasonably safe vehicle and don’t live in the middle of a congested city, you’ll have affordable rates. Check out car insurance quotes comparison sites to explore affordable premium rates based on your needs from all the top insurance companies. Choose your desired deductible amount, extent of coverage and the type of vehicle you’re insuring through simple prompts to get competitive rates from insurers.
Unless you’re going electric, fuel is a constant. For example, the difference between a 20 mpg 2016 Kia Sorento and 30 mpg 2016 Ford Focus at a median cost of $3.00 saves almost 12 dollars just on a trip from Chicago to Detroit. Just think about the annual possibility for savings if you choose a fuel-efficient vehicle.
General Maintenance and Repair
As convenient as owning a vehicle is, they’re not without their share of headaches and costly repairs. But as long as you stay on top of your car’s maintenance, things like regular oil changes, checking fluids, replacing windshield wipers, changing spark plugs and getting your tires rotated— you should be OK. Since you’re buying a new car, the vehicle shouldn’t require much maintenance compared to buying a used car.
As long as you treat it right, you’ll extend its life for years. Definitely look out for vehicles with a longer warranty to protect yourself from costly repairs down the road. It shouldn’t be your main concern, but is another factor that will shave money off the actual cost of buying the car.
Vehicles depreciate. It’s what they do. So when buying new, know that you’re paying a hefty price tag for something nobody else has ever owned, and because of which, your car’s value will drop immensely in just six months, a year, and especially three years. So unlike other investments expenditures, automobiles do not hold their purchase price tags. This is why you should buy something that will last you.
What About Storage?
Unless you have a garage or plan on leaving your brand new car parked on the street, you’re going to need some kind of monthly parking facility for work or home, or maybe both. These garages can range in price, but generally expect to pay a few hundred dollars a month.
There’s more to focus on when buying a new car than the price tag, rebates and discounts the car salesman can offer you. Be diligent in examining all angles and costs tied to buying a new car by keeping the above things in mind.