The Cost of Owning a New Car

Keys from the car  on money.

Sticker price isn't the only thing you should consider when buying a new car

Congratulations.  You've found the perfect car that meets your needs, your lifestyle and your budget.  But if you think sticker price is the only new car cost you should consider, think again.  There are a variety of additional expenses associated with owning a car — expenses many car buyers often overlook. 


Simply put, when you own and operate a vehicle over time, it depreciates, or diminishes, in value.  This depreciation in value is caused by a variety of factors, including age, mileage and condition.  The unfortunate reality of buying a new car is that it depreciates the minute you drive off the lot and, in a majority of cases, it continues to depreciate during the course of its lifetime.

Because certain new cars depreciate faster than others based on factors such as make, model, build quality and market demand, it's important to do your research ahead of time to determine which vehicles hold their value better than others.  What's more, there's a lot you can do to maintain your car's value during its lifetime.  Things such as racking up excessive miles or neglecting to have your car routinely serviced can wreak havoc on its resale value.

Fees & Taxes

Beyond sales tax at the time of purchase, you will most likely be responsible for paying additional fees and taxes assessed by state & local governments, and government agencies such as the Department of Motor Vehicles (DMV). Expenses like vehicle registration and title fees vary from state to state, so it's important to know what your state requires and to factor those costs into your new car budget.

Financing Costs

Financing costs are the costs associated with borrowing money to purchase a vehicle.  If you're obtaining a new car loan, be sure to factor in any down payment amount and the interest rate you'll pay during the lifetime of the loan. 

Insurance Costs

When it comes to buying a car, insurance is one of the most frequently overlooked cost centers and yet, it can be one of the most expensive.  Because car insurance costs vary widely from driver to driver based on age, driving record and coverage amounts, it's important to compare car insurance rates before you visit the dealership to get a solid estimate of what it will cost to insure the vehicle you plan on purchasing.  Insurance costs could very well influence the type of car you buy.

Fuel Costs

Be sure to calculate the average amount of miles you drive, current fuel prices and your car's EPA estimates to get a good idea of your car's monthly fuel costs, before you buy.  Even though gas prices may fluctuate dramatically throughout the year, it's good practice to have a baseline idea of your car's monthly fuel expenses and to factor these expenses into your overall budget.

Maintenance Costs

Not only is routine maintenance important in keeping your car running properly, virtually every major automaker today requires routine maintenance as part of its warranty guidelines.  Failure to do so could result in denial of warranty coverage.  As such, be sure to factor into your new car budget the estimated cost of routine service appointments by referring to the suggested service schedule found in the owner's manual or service/maintenance guide.

Even though it's virtually impossible to predict every cost associated with owning a car, it's important to consider some of the primary expenses and to factor those expenses into your overall new car budget. 

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