The majority of prospective car buyers only consider the upfront cost of purchasing a new vehicle. They judge the deal based only on the amount of money they pay before driving their new car off the dealership lot. However, studies show that the initial investment can be misleading. Over the course of several years, a seemingly inexpensive automobile can end up costing far more than a higher priced model.
Below, we ll explore the four factors that can increase the long term cost of automotive ownership. When you eventually decide to purchase a new model, keep these factors in mind.
#1 Fuel Efficiency
A lot of drivers would be surprised by the variance in gas expenses for different models over five years. Driving a 4 cylinder vehicle can literally cost thousands of dollars less than a fuel guzzling SUV. To determine how much you ll be spending on gas, assume that you ll be driving 12,000 miles each year. You ll also need to make an assumption regarding where you think fuel prices will be during the next five years.
#2 Insurance Premiums
Many motorists believe that their insurance premiums are based solely upon their driving record. In truth, most insurance providers also take into account the type of car you re driving. For example, the premiums to insure a red sports car will likely be higher than those for a family sedan. Call your insurance agent prior to purchasing a new vehicle. He should be able to tell you which models will cost more to insure.
#3 Regular Maintenance And Repairs
This is one of the hidden expenses of owning an automobile. The fact is, when somebody visits a dealership lot, the last thing they re thinking about is how much they ll need to pay for repairs. Maintaining and repairing your car is inevitable. The older it gets, the higher the likelihood that its parts and systems will fail. The important thing to realize is that certain models are more expensive to repair than others. And while your warranty will cover the first few years, it won t last forever.
#4 Depreciation
Finally, we come to the largest expense of all: depreciation. Most people understand that automobiles depreciate. But, more than a few would be surprised to discover how much, how quickly, and the disparity between different models.
It is estimated that vehicles lose more than half their value during their first five years. Some models lose their value more quickly than others based on available inventories, popularity, and even the cash incentives offered by automakers and dealerships.
When you decide to purchase a new car, consider the initial price in the context of how much it will actually cost to own the vehicle. In other words, don t be swayed simple because of a low sticker price. Consider the factors I ve listed above to make sure you re still happy with your purchase several years down the road. Now go out and enjoy that new to you ride. Be careful and Drive Safe!
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