How Much Does Your Car Really Cost You??

How Much Does Your Car Really Cost You?? by By Buddy Evans, President of Big Bucks Auto™

For some people, cars are a necessity. They need a car to get to and from work, and other places. But for many others, cars are certainly not a requirement. People who live in big cities, for example, often don't need a car, but own a car, even if they're only using it every once in a while.
With the economic problems facing us today and everyone trying to cut back on spending, one has to ask, "Do I really need a car?"
Granted owning a car or two is part and parcel of the American Dream, but so is paying your mortgage, having a decent paying job and putting food on your families table. With these uncertain economic times, if one aspect of your American Dream is preventing you from achieving another more important goal, then maybe it is time to reprioritize. Yes, we understand that you waited your whole life to have that shiny, brand new car of your dreams, but remove your emotions of out of the equation and let's look at the facts.
One way to decide this question is to look at the factors that add up to how much your car really costs you per year.
Whether you drive a total beater, or a nice, expensive, luxurious gas-guzzler; selling your car will certainly save you money. That's because in nearly all instances, mass transit and other forms of commuting are cheaper than owning, maintaining, and fueling a car. We need to look at all the costs involved in car ownership.
Car Insurance
Cost of Gas and Fuel
Maintenance and Repair
Vehicle related licensing, registration and other fees
Car purchase, loan payments and finance charges
Parking, tolls, etc.
Insurance: Automobile insurance costs are huge and keep on going up. Drivers pay more for auto insurance in states with significant urban populations, greater traffic density and a higher cost-of-living, though they are the people that are least required to own a car. Tort liability and other auto laws as well as each state's auto body repair labor costs, liability coverage requirements and theft rates also have an impact on auto insurance prices. While the average annual cost for auto insurance premiums nationwide for 2007 was estimated at $847 per policy, the top five most expensive cities (Detroit, Philadelphia, Newark, Los Angeles, and New York City) have rates from $5,162 to $3,127 per year. Even the most insurance friendly city, Roanoke Virginia, come in at $758.00 per year. That's a nice chunk of change.
Gasoline: Granted gas has decreased to date to a national average under $2.50 a gallon, but the average American still uses 500 to 600 gallons of gasoline every year. As the average fuel economy of new cars and light trucks declined from a high of about 26 miles per gallon in 1988 to less than 24.5 mpg in 1999 due to larger vehicles, more horsepower, and increased sales of sport utility vehicles (SUVs) and trucks, our consumption of gas has gone up with the price. Now almost 50% of the passenger vehicles on the road are SUVs and light trucks that do not have to meet the higher fuel economy standards of cars.
Depending on where in the country you live, and depending on the gas prices, as the average vehicle is driven more than 12,000 miles per year today that adds at least another $1,250.00 to the cost of owning a car. If we happen to see another rise in prices as we did in the early summer of 2008, then you can just about double that number. At 4.10 a gallon, which was the height of the summer 2008 gas price increases, that number goes up to $2,050.00 dollars a year spent on gas alone. We all know it hurts when $50.00 does not even fill up your gas tank.
Repair and Maintenance: Then there is the regular scheduled maintenance for a car. This number is a bit harder to pin down since so many factors must go into keeping a car in safe running condition. Baring the kinds of repairs that we all dread, like your car's drive shaft falling off the bottom of your car at the worst possible time; an oil change, fluid upkeep, and tires happen to all of us on a regular basis. Add in the somewhat semi-annual break change, mufflers and battery replacement and the cost of average car maintenance falls at about $340.00 to 650.00 a year.
Vehicle related licensing, registration and other fees: One needs to add in the costs of licensing and inspection a vehicle as well if we are going to be realistic here. Inspections have a range of prices on them depending on whether or not emissions' testing is involved in your state. Registration and then the cost of keeping your driver's license too must be included. As registrations don't happen every year for everyone, the cost still comes out to between $200.00 and 690.00 per year; if you don't get any tickets.
Purchase, loan payments and finance charges: Then, we can get to the actual cost of the car itself! Granted one can buy an old clunker out of the paper for $1,500.00, but if you are looking at the cost of a new car then based on 2006 prices, the average import price tag was $36,627 while the domestic new car price tag hovered in at $22,855. Average out the two, we have a basis of $29.741 to jump our numbers off of.
That adds up to quite a hunky monthly car loan payment and with credit rates going through the roof, quite a bit of your money paid out in finance charges as well. For example, a new car priced out at 29,000 with a $7,000 down payment /trade in, an average tax of 7% and interest rate at the current US average of 6.58%, the monthly payment will be $549.94. That's $6,599.28 a year here, folks.
Parking: Without getting too insane about figuring in the cost of your home and renting out the driveway or garage for your car, we can just look at tolls and parking costs on a major metropolitan city basis. Average daily rates for parking increased 3.5% from 2006 to 2007 bringing the cost of daily parking in some areas as high as $32.75 per day! That means, even if you just pay for parking on weekdays when you go to work, you can be spending over $8,500.00 just to put your car someplace when you are not using it!
The grand total cost of owning a car in the US is…$19,799.00 per year.
Taking the midrange amounts of the above calculations and adding them all up, it truly is almost twenty thousand dollars a year to keep a new to almost new mid range vehicle on the road in a city in the United States. If you keep that car for 5 years, then you are spending almost 100 thousand dollars for a car, something that can hit a tree and be gone in an instance. For many people that's a new house, or some really great vacations, or your child's college education!
With a number like that staring you in the face, you can really take a good hard look at your emotional ties to your automobile and decided for yourself, "Do I really need to own this car?

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