Cars: More than Just a Sticker Price
For many, owning a car is a rite of passage. It is the dream of every teenager to one day get behind the wheel of a car and drive away. But whose car are they planning on getting into? Mom and dad’s? Perhaps, but the average 16 year old dreams that the first car they take will be their own. But is a 16 year old really ready to handle the responsibility of a car? This question has nothing to do with maturity level, although that should be a factor, but rather how much they truly understand about car ownership and what it will cost them.
Most teenagers think they are ready to own a car when two things happen: 1) they finally turn 16, and 2) they save up enough money to buy one. But most teenagers are naive and fail to include the expenses that come with owning a car after you buy it. ConsumerReports.org has a very informative page that explains all of the costs of owning a car while helping to point you in the right direction when choosing what car to purchase.
Surprisingly, many times the vehicles that cost less to drive off the lot will cost you more in the long run. For example, this website found that while a Mitsubishi Lancer could cost you $4,000 less than a Mini Cooper to drive off the lot, your costs of ownership over five years would be $5,000 more.
So to help in breaking down all of the costs of owning a car ConsumerReports.org created a pie chart showing each percentage cost of ownership. The percentages are as follows (based on five year ownership):
Depreciation – 46%: Depreciation accounts for nearly 50 percent of your cars total cost. But this is only estimation. The average car can depreciate about 65 percent over this five year period, and some depreciate even faster than that depending on make and model.
Fuel – 26%: Especially in today’s market, fuel will be the second largest cost factor for your automobile. For example, over a five year period, it could cost you more than $15,000 to fill up a Dodge Nitro. It is assumed that the average car travels 12,000 miles per year, at an average gas price of $4.00 per gallon, which means that you are guaranteed to put out several thousand dollars in gas alone.
Interest – 12%: This piece of the puzzle depends on exactly what car you purchase, but the average interest rate is about 6.8 percent.
Insurance – 10%: This cost will definitely vary among individuals based on age, location, and driving record. But one may be surprised to know that many insurance companies will raise your rates depending on what car you own. So be sure to keep that in mind when searching for a vehicle, because the increase in insurance prices may not be worth the name you have on your bumper.
Maintenance and Repair – 4%: Althought maintenance and repair constitutes only 4 percent of your costs, it can be the most devastating of all the slices. Most maintenance and repair costs cannot be planned for, they simply happen, and normally at the most inopportune time. So whether you deal with auto repair in California or North Dakota, make sure you have a decent amount of money set aside in cases of emergency and car repair.
Sales Tax – 3%: This will cost owners on average just as much as maintenance costs at a national average of 4.9 percent.
So here are the facts proving that much more goes into owning a car than simply having the money to purchase one. Be sure to show your teenager this when they approach this stage of life, but prepare them for the reality check they are sure not to enjoy.
Tags: auto repair in California, Car Ownership, Cost Of Ownership, Depreciation, Dodge Nitro, Enough Money, Estimation, First Car, Maturity Level, Mini Cooper, Mitsubishi Lancer, Model Fuel, Mom And Dad, Old Dreams, Owning A Car, Pie Chart, Right Direction, Rite Of Passage, Rsquo, S Market, Sticker Price
