New Car Ownership Cost: A Lot More Than What You Pay For It
Numbers add up quickly, especially when talking about new car-buying money. The sticker price on a new car is only the initial cost. Cheaper cars may depreciate faster, be more expensive to maintain, pay higher insurance or have bad gas mileage. Before going after the best looking car, there are many things you must know to avoid before falling into expensive traps.
The biggest cost of car ownership is depreciation – the difference between what you pay for the car and how much you can get for it when you sell it. During the first year, your car may lose 25% of its original value and 70% by the time it’s five years old. You can easily find the best resale values cars online before you buy, a simple step that can make your investment worthwhile.
The second biggest expense of owning a new car is insurance. Luckily, this too can be researched before you buy. Your driving records and location make up the bulk of your insurance rate, but many car features can also help you get inexpensive car insurance.
Other than that, we can’t really tell you what the overall best deal is because it will depend on your priorities. However, here are a few general rules to help you decide:
- Reliable brands need fewer repairs and hold their value better. Most manufacturers of luxury cars also offer free maintenance and repairs for a few years.
- Safer cars have higher prices but you save in insurance.
- If you drive a lot, fuel-efficient cars are the way to go.
- Financing expensive cars increases the dealerships profit because not only do you pay a higher price, you also pay more money in interest.
- Hybrids are a little more expensive but save you gas money and you get tax incentives.
- Cool cars may be in the “most stolen” list and that increases your insurance costs.
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