We Americans love to move around in our own car and derive pleasure from the convenience it has to offer. However, this pleasure comes with a price tag. The purchase price that you pay for the car is only the tip of the iceberg. There are numerous costs associated with owning and a car.
Interest on car loan
Price of the car is the main cost. It is the amount the buyer and the dealer agree upon mutually. The buyer either pays cash or borrows car loan from a bank. Recent studies show that 89 out of 100 car buyers in America borrow car loan. This adds up to the cost, because they pay the price of the car plus the interest on the loan.
Motor insurance or car insurance is mandatory in some of the states of USA. The purpose of car insurance is to safeguard the car owner against the financial losses resulting from physical damage or bodily injury as well as the liability that arise, in the event of traffic collision. Higher value of the car means higher insurance premium. So this is yet another strand of cost that further lightens your pocket.
It is quite obvious that fuel is necessary to operate the car. Rising prices of gas further add fuel to the cost. Fortunately, automobile companies have made admirable jobs in producing fuel efficient cars. Keeping fuel consumption under control is the least that can be done to curtail the cost of owning a car.
Maintenance and repairs
You would never want your car to break down in the middle of the road. Maintenance is necessary to ensure that your car operates without any glitches.
A new car will not need much of maintenance apart from oil- changing and tune-ups after regular time intervals. If at all the cars needs major repairs, it is all covered under the manufacturer’s warranty for initial 3 to 5 years.
However, you do not get to enjoy such perks if you buy a used car. A used car may need a lot of maintenance work done. It may need replacement of certain core components, further adding to the cost.
Many car-owners fail to include depreciation on their list, most probably due to negligence or lack of knowledge. Depreciation is the decline in the value of the car due to usage. Depreciation occurs the moment you drive the new car out of the dealer’s showroom. Depreciation does not directly add up to the cost if you wish to use the car for a long period of time. The problem begins when you decide to sell off your car. The market value of the car goes down year after year and you may not get a good price.
After purchasing a car you need to get it registered with the state authorities, which has its own set of expenses. Other costs like parking tickets, parking fees, tolls etc. are incurred as and when required.
Thus, these are the major components of cost associated with owning a car.