Redwood Credit Union

Know the True Cost of Car Ownership Trying to determine how much you can afford to spend on your vehicle purchase? When doing your calculations and reviewing your budget, keep in mind that the cost of car ownership goes far beyond a vehicle's sticker price. Additional expenses include: Purchasing Fees These include your taxes, tags, and title and can average around $1,000. Finance Charges If you take out a loan to pay for your car, you'll have to make monthly payments plus interest to pay it back. Insurance Young and inexperienced drivers can be expensive to insure. Annual insurance cost averages range from $1,000 to $3,000. Maintenance and Repairs The more you drive, the more upkeep your car will need, including oil changes and new tires. There are miscellaneous costs to consider as well, like parking and car washes. Fuel Annual fuel costs can average close to $1,000 or more, depending on your car's fuel efficiency and how much you drive. Depreciation It's the largest cost of owning a car. In five years, your car will be worth about 65% less than when you bought it. Sources: driving-tests.org; Ameriprise Auto and Home Insurance Put the Brakes on Overspending It's no secret that vehicles come at a wide variety of price points. For your first vehicle purchase, focus on safety, reliability, and affordability. (You can save your dream machine for later, when you have more disposable income.) Of course, even among practical car models, you may find varying price points – especially if you're comparing new and used cars. Keep in mind that new vehicles depreciate rapidly as soon as they're driven off the dealer's lot, so you may be able to save yourself a lot of money by opting for a used vehicle instead. (Look for a certified pre-owned vehicle with low mileage.) On the flip side, most new cars come with a warranty – meaning certain repairs may be covered within a certain timeframe or mileage. This not only has the potential to save you money if something goes wrong, but can also offer peace of mind. Ultimately, it's up to you to decide whether you should buy new or used. Just be sure to do your research and to focus primarily on safety features and basic needs during your car search. By keeping these priorities in mind, you'll be able to select a vehicle both you and your wallet will be happy with.

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