What Is The Total Cost Of Owning A Car
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Calculating the total cost of owning your car or one you might buy soon is the best way to make sure your auto budget is in line.
The average monthly payment on a new car was $667 in the second quarter of 2022, according to credit reporting agency Experian. But thats far from the true cost to own a car.
For vehicles driven 15,000 miles a year, average car ownership costs were $10,728 a year, or $894 a month, in 2022, according to AAA. That figure includes depreciation, loan interest, fuel, insurance, maintenance and fees.
*Note: The total car cost calculator is pre-populated with estimates based on data from Experian and AAA. See our methodology below.
How Much Does Insurance Pay For A Totaled Car
After reading this far, youre likely to ask, If my car gets totaled, how much will insurance pay?
This is a valid question. After an accident has occurred, youre left to battle with the claims adjuster from your insurance company about how much your totaled car is worth.How much your insurance will cover for your totaled car is included in their policys fine print.
However, for you to get the maximum payout for your totaled car, you need to know how your insurance company will calculate the amount and the options that are open to you.
How To Save On Car Ownership
Although the cost of car ownership can be steep, owners can take steps to keep expenses in check:
- Shop for cheaper car insurance: Some insurance companies are known for offering cheaper rates than others, so getting and comparing quotes from multiple providers may be a smart move.
- Refinance your car loan: Some car loans can be refinanced at a lower rate. It may be wise to check and see if theres a lower rate available, especially if the market has changed since the vehicle was purchased. With interest rates rising quickly, it might be a good time to consider this step.
- Consolidate driving trips: The more you drive your car, the more maintenance it will generally require. It may be a good idea to consolidate errands in one trip, carpool with friends and neighbors, and research alternative local public transportation options. Driving less might also mean lower car insurance costs, especially if you participate in a telematics program.
- Maintain your car: When it comes to vehicle repair costs, the best defense is a good offense. Having routine maintenance done may help prevent higher repair costs down the road. Early detection of issues can often bring repair costs down.
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How To Determine If You Can Afford A Car
If you go into the car purchasing process with some key numbers, youll be more prepared to buy. And the numbers are fairly simple. You earn an income and you have fixed expenses, like rent, healthcare and food. The amount left over after paying those expenses is the money you have to spend on cool things like cars!
If youre thinking, how much of my income can I spend on the car, remember the 20% rule. Financial experts say your car-related expenses shouldnt exceed 20% of your monthly take-home pay. So, lets say you bring home about $2,500 each month. The total amount you should spend on your car including loan payment, gas, insurance and maintenance is right around $500. If you stay within these limits, you should have no problem paying for your ride. Want to spend a little more, you can always cut back somewhere else.
However, everyones budget is different based on the expenses that you have. Take your personal finances into account to ensure that adding a new car payment wont add additional stress.
Your Insured Cars Loan Balance
The payout from your insurance company has nothing to do with your cars loan balance .If youve got a loan hanging over your car, youd need to clear it before getting a new car. You might be lucky and the payout from your insurance company on your totaled car will be more than the loan balance.If this is the case, your insurance company will pay the loan balance and give you whats left as down-payment for a new car.
However, if the loan balance exceeds the payout from your insurance company, then the whole payout will be used to clear the loan. Youd then have to make up the difference left.A GAP insurance can save you if you purchased one after taking the loan on your car. GAP insurance will help you pay for the amount difference between the ACV and the amount left to cover for the loan on your totaled car.
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Car Cost Calculator Terms & Definitions
- Purchase Price How much you pay for the car.
- Down Payment The initial amount paid to the dealer that is subtracted from the purchase price to determine the amount financed.
- Annual License The fee paid every year for the license to drive the vehicle .
- Extended Warranty An extended warranty, sometimes called a service agreement, a service contract, or a maintenance agreement, is a prolonged warranty offered to consumers in addition to the standard warranty to transfer risk away from the consumer to the dealer or manufacturer.
- Financing Rate The interest rate that reflects all the costs of the loan during a one year time period.
- Car Insurance A policy purchased by vehicle owners to pay the costs associated with getting into a car accident.
- Term The length of the auto loan financing usually measured in months.
- Trade-in Allowance The value of your old vehicle being traded toward the purchase price of a new vehicle.
- Sales Tax Percentage The tax percentage amount you pay when purchasing a vehicle .
- Wear and Tear The stress on the car caused by normal use.
- Depreciation Cost The amount reduced from the value of your vehicle due to age, mileage and wear.
What’s The Difference In Value If I Trade In My Car Compared To Selling It Myself
You can typically get more by selling your car to a private party buyer than trading it in to a dealership. However, private car sales take more time and effort, while a motivated dealer will likely work to make the trade as effortless as possible. Dealers can handle all the necessary paperwork and make any loan payoff.
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Which Manufacturers Have Complimentary Maintenance
Lets face it: buying a new car can be a pricy proposition. But heres some good news. Over the last several years, more and more manufacturers have been including a complimentary maintenance program as a perk. After all, who doesnt like something for free?
This is a win-win proposition for both the buyer and the manufacturer. You as the buyer get some no-cost services, but the dealer also benefits. Theyre hoping that you will get used to relying on their dealership for maintenance and repair. In addition, some luxury manufacturers wrap these services into the overall feeling of a high-end concierge. For these lucky few, all the maintenance details are cared for, so they can focus purely on the joy of driving.
Coverage and duration of these complimentary maintenance programs definitely vary. Some only cover the first inspection and oil change, sort of a small thank you for buying. Others try to entice you with all the scheduled maintenance you need up to 6 years and 60,000 miles. And while these national programs are provided by the automaker, certain dealers get in on the act with things like free car washes or complimentary vehicle checks.
These programs do change often, so for the latest information, weve created a complimentary maintenance program list you can view to see which auto manufacturers are offering coverage. Even so, the dealer might be the best way to know for sure if that new car youre considering comes with a complimentary maintenance program.
How To Calculate Your Total Cost Of Car Ownership
The calculator is pre-populated with estimates based on 15,000 miles of driving per year, so we strongly urge you to enter your exact expenses to see your total car costs.
Monthly car payments and insurance premiums are self-explanatory, but heres more information on estimating other costs of car ownership.
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Siriusxm Vs Streaming Services
When satellite radio first launched in the 1990s, it represented something that terrestrial radio just couldnt offer: Hundreds of channels, customized and curated for whatever kind of listening you loved. Especially for fans of talk radio, it got down to granular levels that the AM and FM bands just couldnt compete with.
But in the intervening years, a lot has changed. Streaming services like Pandora, Spotify and Apple Music have taken ownership of the music industry, and theyre the go-to options for hard-core music listeners. Services like Apple Podcasts and Stitcher stream even more specific talk listening right to your phone, offering variety that SiriusXM just can’t.
So why bother with SiriusXM at all with all these streaming services available? There are a number of really good reasons:
- Curation: Streaming services in general have algorithmic curation. Do you listen to a lot of AC/DC? Spotify and Pandora are going to serve you more, and serve you things that are kind of like AC/DC. Buuuuut not really. How many times have you been listening to music you like and suddenly, Spotify is serving up a song from a band youve never heard of, that youd never listen to otherwise, and that you really, really dont like. It happens every single day. The algorithm is good, but sorry, it aint that good.
Sirius XM Deals
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How Much Does The Average Car Cost
In 2022, the average cost of new and used cars topped $47,000 and $33,000, respectively. High demand, low inventory, and inflation all played a role in prices creeping up, especially for new cars.
To learn precisely how much car you can safely afford, check out our Car Affordability Calculator. Youll learn about the 35% rule, when leasing makes sense over buying used, and whether you should pay cash or finance.
But in the end, your monthly payment is just one small part of the true cost of ownership.
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Tips For Price Negotiations
The benefit of using the instant cash offer or selling your car to a dealer is that these methods can take price haggling out of the equation. When selling your vehicle to a private owner, let the buyer take the lead in any negotiations. Ideally, youve given yourself some padding on your asking price, so the buyer can either accept the price or counteroffer.
- Determine your lowest acceptable offer. Know your lowest acceptable offer beforehand and take into consideration the number of possible buyers you have in hand. The art of negotiation involves feeling confident that other buyers may be out there if you cant agree on a price. Due to the microchip shortage, more buyers may be willing to pay a higher price, so bear that in mind.
- Be realistic. If a buyer offers below your lowest acceptable sales price, be prepared to move on. Suggest that they contact you if they reconsider. But if the buyer makes a reasonable offer, be prepared to say yes.
- Bring paperwork just in case. Be prepared to sell your car on the spot if the buyer wants to complete the sale. Remember to bring your car title and all the collected paperwork to the meeting but keep it in a safe place until decision time.
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What Is A Totaled Car
A car is referred to as totaled when its a total loss after an accident. This means that your car has been damaged to the extent that having it repaired wont be worth it.Lets say your car is worth $9,000 and after an accident, it would need $8,000 worth of work. Is it worth it? The clear answer is NOyour car is already a total loss. So youre probably wondering How do I sell my car thats been totaled?The only thing left that will be valuable about your car will be the parts which you can sell as scrap metal.
You can have an auto-appraiser check the amount of damage done to your car. When youve had the check done, itd be easier to determine the totaled car value.Most times, your car stands a greater chance of being totaled if its an older model. This is because older car models tend to have lower values of resale.
If the damage done to an older car is severe, its very likely to have the cost of replacing the damaged parts exceed the cars value.So, what an auto appraiser does is to estimate the repair costs and weigh it with the value of your car to know if its indeed totaled.This is why youll find a lot of people unwilling to have their totaled cars repaired and would rather have it sold, probably as a research study for an automotive class.
What To Do If My Car Wrap Turns Rusty
The prolonged exposure to pollutants can also negatively affect the film on your car wrap.
If you notice that the outer layer of your wrap has turned brown, it’s essential to remove it to prevent further damage to the paint underneath it. Usually, this issue only requires replacing the affected panel.
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Estimated Pro Cost Of Labor
Quality paint jobs on repaints are going to cost you significantly more than doing it yourself, but hiring a professional might save you time in the long run.
For example, professionals remove all the doors to paint the door jambs/jams, and they also have to remove or mask trim pieces which can sometimes be a lot of work.
Some pros might even take off the hood of the car for it to be painted on both the outside and the inside.
Like we stated earlier, the average cost is anywhere from $2-4k for hiring a pro for the job.
Why Hire a Pro?
- More attention to detail
Professional autobody painters know sanding and body filling techniques that take years of experience. Your car will look like a show car once a good body shop gets ahold of it for some paintwork.
Chances are a pro painter will really only take a few hours to paint your vehicle despite the number of labor hours charged for the job–the good part about this is that you saved a lot of time by not having to paint yourself.
- Licensed and insured
Nobody wants to talk about legal situations, but it’s something that you should always take into consideration.
- High-quality paint job/showroom quality
If you hire a high-rated pro painter for a basic paint job, you can be sure to expect showroom quality on your respray.
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