The true costs of owning a vehicle: Repairs, maintenance, fuel and more all add up
Sandra Fry: Determine what you can afford to allocate towards transportation costs and then do the math on any offer you see
Long before being able to drive, I dreamed of the freedom that would come from having my own car. I was able to make that teenage dream a reality with the help of my aunt and uncle who sold me their yellow 1980 Chevette for $500. Even though I was a good saver, my 17-year-old self had no idea what really went into vehicle ownership, especially ongoing maintenance. As a result, my first car only lasted six months.
The true financial costs of owning a vehicle are often more than we anticipate. I’m sure I’m not the only one who could have benefited from a better understanding of what those costs are and how to prepare for them.
As easy as it is to get stars in your eyes when you see advertisements for car payments as low as $99 per week, it’s a good idea to review your budget prior to embarking on your car ownership journey. Determine what you can afford to allocate towards your transportation costs — that is, loan payments plus everything else that comes with owning a vehicle — and then do the math on any offer you see.
Only then will you realize that what looks like an affordable weekly car payment of $99 actually adds up to $429 every month ($99 times 52 weeks divided by 12). And that payment does not include insurance, fuel, parking, repairs and maintenance. If in doubt, be prepared to walk away to give yourself time to think before signing on the dotted line.
I have found that my clients often overlook setting money aside monthly for car repairs. This is likely because it’s hard to estimate how much to save for these unexpected bills that can throw a budget off track. A good rule of thumb is to allocate $50 towards maintenance costs for every tank of gas your vehicle uses. This amount will vary according to your vehicle’s age and condition, but saving at least some money towards these unexpected costs can help prevent you from relying on credit to cover them, thus helping prevent any subsequent excessive accumulation of debt.
Keep in mind that you also need a budget for regular maintenance such as oil changes, new wiper blades, snow tires and car washes. The more miles you put on your car, the more it’s going to cost to maintain it, but the better you maintain it, the longer it will last.