The sum of the initial investment doesn’t determine the true cost of car ownership. Car maintenance expenses include many additional factors that people usually overlook: fuel, insurance, fees, etc. This blog breaks down the true cost of car ownership and outlines what to consider when planning a budget for your next (or first) vehicle.
Understanding The Actual Cost Of Owning A Car
Vehicle expenses don’t simply end after you’ve made your purchase. Most automotive fans and organizations use the acronym TCO. It stands for the true cost of car ownership or total ownership costs. Both iterations of the notion can be further divided into two interrelated groups: vehicle maintenance/running costs and external/standing charges. You have to factor in that these directly impact vehicle-associated expenditures.
What Are Car Maintenance Expenses and Other Charges?
Let’s dig into the true cost of car ownership in detail. First off, you must be aware of what you will spend money on. Such expenses as fuel or electricity, scheduled and unplanned maintenance (including labor tolls/fees/charges), tire changes, and other ‘routine’ service and spare parts prices (if your vehicle falls short of the manufacturer warranty) are responsibilities you must accept. These are arguably the most common payments that will stack up after paying the initial value.
However, the true cost of car ownership is also heavily influenced by standing charges. They include but aren’t limited to insurance, taxes, registration expenses, vehicle emissions/conformity tests, road tolls, car wash services, interest rates of vehicle lenders, and depreciation. The latter two usually have the most significance on your annual maintenance costs. New cars tend to lose approximately 20-25% of their value in the first year of owning. Though, in the next few years, this tendency slows down. In contrast, used models have already been hit with the depreciation, and it doesn’t influence them as heavily as brand-new vehicles.
To sum up, review the chart that will help you better understand where you’ll spend your hard-earned bucks.
How To Calculate The True Cost Of Car Ownership?
It’s an easy task. You can address some truthful tools on the Web. For instance, websites like Edmunds provide you with all the necessary instruments to calculate the estimated ownership costs for your particular model. On top of that, you can find detailed market value information in our vehicle reports. The insights are generated by J. D. Power (former NADA) and collect records from car dealers all over the country. We also have trade-in and retail values captured by Black Book available for most models. Nonetheless, keep in mind that factors like your credit history and even the vehicle average mileage or a packed trim level can alter your estimates.
ClearVIN Is Here To Give You Peace of Mind
Keep calm, as with our services you can learn a lot about the vehicle’s past. Our comprehensive vehicle report provides you with up-to-date information about car ownership history, vehicle title brands, and recall campaigns (if there were any). As a rule of thumb, vehicles deemed salvage have seen a major decrease in their value, so you will see what’s worth your money and what’s been refurbished. In addition, you can learn whether a car is a keeper or a beater. In fact, well-taken care of models have lower ownership costs than their damaged counterparts. Don’t fret. We have you covered even if you’re afraid of flood-damaged cars.
Understanding what lies behind the true cost of car ownership will help you make a weighted decision and buy a dream car. ClearVIN is your trusted partner that provides you with a ClearVIN VIN Check Report when you are eager to know as much as possible about the vehicle you intend to buy. Register for free to get access to a comprehensive VIN lookup and free license plate lookup.