The Hidden Costs of Vehicle Ownership
While owning a car gives you a ticket to freedom (no more waiting for public transport or relying on rideshares), it also comes with a few strings, such as the cost of ownership. While the sticker price may seem manageable, if not inviting, it is only the beginning. There are lots of things that you may not realize but are non-negotiable when it comes to owning a vehicle, including maintenance, fuel costs, insurance premiums, and more. Discover the hidden costs of vehicle ownership so you can determine what to budget for when buying a car.
FAQs
- Knowing the hidden costs of vehicle ownership can avoid any surprises and help you budget for your car purchase and maintenance.
- Among the hidden costs of owning a vehicle are depreciation, insurance policies, fuel costs, emergency services, toll and parking fees, and more.
What Are the Hidden Costs of Vehicle Ownership?
Here’s a quick rundown of all the hidden costs of vehicle ownership that you need to know about before getting your first car.
Depreciation
Depreciation happens the moment the car is driven out of the dealership. The rule of thumb is that brand-new cars lose as much as 20% of their original cost in the first year of ownership. That means a brand-new car with a $35,000 price tag will drop in value to as much as $28,000.
Unfortunately, this is something you cannot avoid, and while you may not feel it financially, it is a hidden cost that will hit hard when you sell or trade in your vehicle. While some brands and specific car models hold value better than others, the majority of cars will have this fate.
Maintenance Cost
Another non-negotiable expense you need to consider when owning a vehicle is the maintenance cost, specifically the regular oil change intervals, tire rotations, brake replacements, etc. It’s a long list of things all required for the upkeep of your vehicle; to keep your car running smoothly and keep you safe. Over time, these costs can add up, and depending on your vehicle, you might shell out thousands of dollars, especially for high-performance and luxury cars.
Repairs for high-performance vehicles and luxury cars are another story, and these vehicles often come with expensive parts. An engine repair or transmission replacement can cost thousands of dollars. Thus, it is wise to always set aside money for an “unexpected repair fund” so you don’t burn away your savings.
Tire Replacements
While you may consider this as part of the maintenance cost, the prices for tyres alone and the frequency for replacements warrant its own section.
Tires wear down over time, and they will need replacement. Depending on the car you drive, the tire it requires, and your daily driving needs, a new set of tires can cost around $500 to $1000. While all-season tires may be cheaper, specialized and high-performance cars (such as those used for all-terrain vehicles and off-roading) can be expensive. Seasonal tire changes, such as winter tires and snow tires, are must-haves that you need to consider, too.
Fuel Cost
Gas isn’t cheap, and oil prices worldwide are only getting higher. Depending on the vehicle you own, this might be the biggest ongoing expense you have for owning one. An average car will need a couple of hundred dollars for monthly gas. Larger vehicles, such as SUVs, trucks, and high-performance cars, will require more fuel, which only means more ongoing expenses.
More and more vehicle owners are cutting their fuel costs by going full electric or hybrid. However, electric and hybrid cars aren’t cheap either, and they also come with their own maintenance costs. While charging your car at home is cheaper than gas, public charging can be expensive, too.
Insurance Premiums
Another ongoing expense that comes with vehicle ownership is the insurance premiums. Drivers with less-than-stellar driving records, younger drivers, and expensive cars will have higher insurance premiums. Not to mention credit scores can also affect your auto insurance rate.
Moreover, as with most things, prices for insurance rates continue to go up year after year, thanks to rising repair costs, more frequent accidents involving cars on the road, and natural disasters.
Parking Fees and Toll Fees
Another hidden cost of vehicle ownership that many people fail to consider is parking fees and toll fees. Living in a busy city and highly urbanized areas means fewer spaces for cars, which means parking lots are at premium rates. Over time, parking expenses can add up to hundreds of dollars. It doesn’t matter if you are only paying parking fees occasionally; it will still add up.
Toll roads, bridges, and tunnels may cut your travel time, but they aren’t for free in many cases. And when you use these routes regularly, toll fees will add up.
Registration Fees and Taxes
Registration fees and taxes are annual expenses associated with car ownership. The cost varies depending on your location, your vehicle’s value (expensive cars have higher registration fees), annual taxes, and even tax emission testing and inspection fees. Again, these may not be astronomical expenses but can add up over time.
Emergency Roadside Assistance
If you need emergency roadside assistance, you may need to cash out a couple hundred dollars to get your vehicle towed. Manufacturer roadside assistance and AAA assistance are valuable safety options that save you lots of money during emergencies. Still, you can only avail of them if you pay their annual membership fees.
Invest in a Mopar extended warranty to enjoy these services and other perks that help you save money in the long run.
The Takeaway
As said earlier, the vehicle’s purchase price is only the beginning. The ongoing and hidden costs of ownership will have a huge impact on your wallet and life. Thus, to protect your finances and avoid financial issues and stress, it is important to consider all these hidden costs of vehicle ownership. Do some budgeting, compute and compare various vehicles, and paint a good picture of how much it would cost you to own a car.
FAQs
What is the biggest cost of car ownership?
Fixed car expenses, such as installment payments (for financed cars), will be the biggest expense. Other high costs of ownership would be the finance charges, warranty coverage, repairs, and depreciation.
Which part of the car costs the most?
The engine is the heart of the vehicle. Therefore, it is one part of the vehicle that costs the most.
What is the most expensive car problem to repair?
Engine replacement is the most expensive car problem to fix. A major engine damage is one of the worst damages that vehicle owners can experience in terms of cost.
What car issue takes the longest to fix?
Any engine problems that require a fix take the longest to repair. Other issues that take a while to repair include transmission builds, engine overhauls, and electrical system troubleshooting.
