How to calculate the true cost of owning a car
Tips to work out the total cost of car ownership
Shopping for a new car is exciting! There is an innate thrill in the buying process; from choosing the make and model, to picking the colour, to signing on the dotted line.
It’s easy to get wrapped up in the excitement while overlooking the true and total cost of owning a car. Investigating these costs, however, is important to making the best decision for both you and your wallet.
Understanding the extra charges that result from purchasing a vehicle will help you in deciding whether it is the right time to buy a car.
Here are some tips from to assist you in working out exactly what your new car will cost you in the long run:
1. Once-off costs
In addition to the actual price tag on the vehicle – there are often other once-off costs that you need to consider.
Service and maintenance plans - If the car you are purchasing does not come with a service or maintenance plan - you will also need to consider purchasing these. An upfront payment, which can be financed, will be required. These plans, however, do help to guarantee that your services (based on the plan), are covered and that should you have any issues with faulty parts in the car, you are not liable.
Factory fitted extras – typically when purchasing a new car, you will be given the price for the standard vehicle and then offered some factory fitted extras. These normally include options that will offer more comfort, enhanced style, or even technology and safety enhancements. Items like an automatic gearbox, air-conditioning, alloy wheels, navigational systems and new braking technology will all certainly add to your cars comfort and resale value……. but they all come with extra price tags. Make sure you only chose optional extras that you really can afford.
2. Periodic costs
As much as we all would love everything on our cars to last forever – there will unfortunately be some periodic upkeep that will need to happen. Find out how much things like tyres, batteries and windscreen wiper blades for your chosen vehicle cost and budget for these.
If you have a maintenance and /or service plan – remember that these do come to an end and servicing costs will then fall into your periodic cost budget.
3. Monthly costs
Owning a car means monthly costs, these include:
- Fuel – even though the fuel price fluctuates each month, it’s worth estimating what your fuel costs are going to be – this will make up the largest portion of money spent on running your car. To ensure that you can afford the car, calculating your fuel consumption will be beneficial.
- Toll fees – depending on the route you travel to school and work – you could very well be faced with a daily toll fee. Be sure to include these costs in your monthly budget.
- Insurance – If your car is financed, you won’t be able to take delivery of it unless it’s comprehensively insured. The finance facility that you use to secure the loan to buy your car may well offer you a quote, but you are not compelled to take it and can shop around for the best insurance deal.
Understanding these hidden costs will help you make a wise decision about the car you can afford.
Use this handy calculator to work out the total cost of ownership on your dream vehicle.