The price of a car can be deceiving. It’s not just the initial cost that you should consider, but also what it will cost to maintain your vehicle every year. The total cost can be surprising. Keep reading for more information on how much you can expect to spend on your car each year.
Gas
The price of fuel can be subject to change. One year, you may spend $3,000 on gas, depending on how often you use your car. The following year, the price might rise to $4,000. It can usually cost around $1,000 per year for gas. This doesn’t include extreme situations like natural disasters that affect gas prices drastically. You will have to take the price of gas into account when figuring out your yearly budget.
If you have a vehicle that gets good gas mileage, this may not be an issue. On the other hand, if you have an SUV or another large car that doesn’t get great gas mileage, you can expect to pay more gas than you did two years ago. New vehicles are also more fuel-efficient than ten or twenty years ago, so the difference will be even more significant.
Maintenance and repairs
This is one of the most significant factors to consider when estimating how much a car costs per year. If you have an older model car that needs to be repaired often or experiences engine problems, this cost will quickly add up. The same is true if you drive a lot for your job. Driving over 15,000 miles per year can increase the yearly cost of repairs.
For avid drivers, the yearly cost of maintenance and repairs is typically around $1,000. If you drive your car infrequently or have a new model often, you can get away with less than this amount. However, if your car needs lots of work and has a lot of miles on it, you might end up spending more than $1,000 on yearly upkeep.
Repairs are usually not covered by a warranty after your manufacturer’s warranty expires. This means that you will have to pay for any repairs yourself. If your car is new, then you may not need to worry as much about maintenance costs. Newer cars are less likely to break down than older ones.
Registration fees
Car registration fees are not usually included in yearly estimates of how much a car costs. However, these fees can add up over time and cause you to spend more than you realize. The good news is that many states offer discounts for people who drive fuel-efficient cars.
Every state requires you to pay registration fees to drive your car legally. The amount varies, but they are usually around $200 per year. If you only own one car, this will be part of the annual upkeep that must be factored into the total. If you have more than one vehicle that you own, then the registration fees should be included in that total.
Taxes
You may not realize this, but the government levies certain taxes on car owners. They are required to pay these every year to drive their car legally. This fee differs from state to state, but it can range anywhere between $10-$200 per year. It varies by county as well.
If you live in a county that has lower property taxes but higher vehicle registration fees, then you may end up spending more on vehicle-related taxes. These are typically only around $20-$30 per year. If your county offers discounts on vehicles with high gas mileage, this could save you money.
When you purchase a new car, make sure to keep an eye out for taxes that are associated with registration. These fees can add up quickly if you aren’t keeping track of them. You don’t want to have any surprises when you go to renew your registration in future years.
Miscellaneous
There are several other costs associated with car ownership that will come up year after year. These aren’t mandated like the yearly upkeep and registration fees, but they need to be considered when looking at your total costs. You don’t want to overlook these expenses because they can add up quickly over time.
Some of the most common miscellaneous expenses yearly include accident repairs, hitch installation or removal, tire changes, window tinting, and license plate changes. If you get pulled over or get in an accident, these fees can add up very quickly.
It’s important to consider all of the expenses associated with owning your car when determining if it is worth it for you. These miscellaneous fees should fall between $100-$500 per year. However, they may be higher depending on what type of vehicle you own, the state you live in and what you do to it.
Depreciation
One of the most significant expenses associated with owning a car is depreciation. This happens as soon as you purchase your vehicle, and it should be included in your yearly estimates. When you first buy a car, it will depreciate by hundreds or even thousands of dollars. The amount varies depending on the type of car and its age.
If you buy a new car and keep it for five years, then you can expect to see around 75% depreciation over that time. Keep in mind that depreciation is different than trade-in value. As soon as you purchase your car, its depreciating value has already begun.
If your car is brand new, then you should expect this number to be high. If it is an older model, you can probably lower the amount you allocate for depreciation.
This may seem like a hefty amount if you buy a newer vehicle or one without many miles on it. However, if you are purchasing an old car in poor condition, you won’t see nearly as much depreciation. The average yearly depreciation cost associated with owning a vehicle will be around $300-$500 per year, depending on the kind of vehicle and its overall value.
Insurance payments
Insurance payments are another yearly expense that can vary significantly depending upon the state you live in, the kind of car you own and how often it is driven.
The average price for insuring a sedan will be around $90-$200 per month or $1,000-2,400 per year. This estimate includes standard liability insurance, comprehensive coverage, and collision insurance. It also assumes that you are paying the average price for your area.
If you own an older vehicle or one with low mileage, then you could see rates as low as $50 per month. If you own a new luxury vehicle or one with high miles, then you could expect to pay more than $200 per month. These costs will also vary depending on your location and other factors, such as your driving record.
You can keep these costs down by comparing auto insurance quotes. The average insurance price will be around $100-$200 per month or $1,200-2,400 per year. This includes liability and collision coverage for a sedan.
Parking costs
If you live somewhere with free parking or on private property where you don’t have to pay anything, then you won’t have to worry about this expense at all.
However, if you live in a large city and need to pay for parking each month, this cost can be high. The average price of monthly valet parking is around $200-$400. If you park on the street, then it could be as low as $50 per month. However, your price may go as high as $1,000 each month depending on where you live and how often you need to park somewhere.
If your employer offers free parking, this cost can be reduced by using public transportation or driving to work. You should also ensure that you aren’t paying for unnecessary things like garage attendants and luxury valet services. The average yearly cost of parking will vary depending on where you live and how frequently your car is used. However, it should be around $1,200-$2,400 per year.
Finance Charges
Probably the last expense that you will have to pay every year is finance charges. These are relatively small compared to other costs associated with owning a car, but they should still be considered when budgeting your yearly expenses.
Cost of Using New vs. Old Car
As was mentioned earlier, the annual costs of owning a new car are often higher than those associated with an older vehicle. However, you might still want to own a brand new car because it has lower maintenance costs or is more reliable. It will be cheaper to finance an older car for six years than buy a new one.
The average price of insuring a new vehicle will be around $160-$310 per month. If you own an older or less valuable car, then you could see rates as low as half this amount. This cost estimate includes liability coverage for a sedan in most states.
Of course, you must also consider how often you use your vehicle to decide between buying or leasing it. If you live somewhere with public transportation and only need to use your car on the weekend, believing it might be cheaper than leasing. You must also consider how long you intend to keep the vehicle before making this type of decision.
However, this won’t always be the case. It often depends on how much you need to finance and for how long. The average cost of funding a new or used vehicle will depend on where you live, the interest rate, and other factors.
The cost of a car is not just the sticker price. It includes taxes, gas, repairs, registration fees and other miscellaneous expenses that are often forgotten when purchasing a new vehicle. For the average person, a car costs $9,122 per year. When you consider all these factors to see what your total yearly expense will be for owning a car, it may surprise you how much you’re spending!
