The Real Cost of a New Car

[HammerStone]

I saw this article posted on another forum.

http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/is-the-car-free-life-for-you.aspx?page=1

Ads that trumpet "Only $199 a month!" aren't telling the full story. AAAsays fuel, tires, maintenance, insurance, depreciation, license,registration, taxes and financing for a year really cost this much:

• Small sedan, $7,086.
• Medium sedan, $9,108.
• Large sedan, $10,972.
• Minivan, $9,903.
• Four-wheel-drive SUV, $11,473.

Of course, these are just averages. Costs do vary. But try adding up your own expenses. The payments on a $20,000 car loan-- that's well below the average new-car price -- run about $400 amonth. MSN Money columnist Liz Pulliam Weston notes that manymiddle-class families have two such payments, adding, "It doesn't takea major disaster, like a job loss, to send them over the edge."


Ontop of that $4,800-a-year payment, add 15,000 miles' worth of gas -- anadditional $1,875 figured at 20 mpg and $2.50 a gallon. Then insurance(it averages about $950 a year for most people, but you can check outcosts for most models here). Throw in a few oil changes and car washes, and you could top $8,000 a year. That's almost $700 a month.


Think of what $700 a month could do to your debts.

 

[WhiteKnuckle]

The difference is,, you pay the tax on the car 1 time. Buying gas is optional,, so the porportion of gas and the price raises and lowers per person. The tags 1 time a year get cheaper after the initial first time. Cost of insurance is cheaper for some vehicles and certain people.

The true cost of owning a vehicle is more than just the sticker price. But, if you look at it the way I do it's not so bad.

I don't have to buy so much gas, only enough to get to work. So, without it, I couldn't work. And if I spend $20 to buy gas to get to work and make $100, that's $80 more than I'd have if I didn't buy gas. My car payment is temporary, If I pay for oil changes, and tires and maintenance (which I do most of it myself anyway) that gives the oppertunity for the car to last longer. So, if my car is payed of in 5 years, I will be putting more money in my pocket.

So,, $20 a day=$400/month wages profit $80 a day =$1,600/month deduct payment of $450/month = net profit of $1,250 a month. If I keep the same car and pay it off my net profit goes up to $1,600/month,, It may get higher if I get a raise within that time frame.

I'm at $15,000 profit for the year.

Maintenance cost every 3 months=$80= $240/year. Tires last longer than 1 year, but you can buy cheap tires that last a year. I wont factor in tires.
Insurance, Full Coverage for the duration of the loan period $75/month (rough estimate for bad drivers) = $900/year

$15,000/year - $240-$900 = $13,860 profit for the year. So, I'm still up.

All in all, by having a car payment and an ability to get to work, I've gained a net profit of $13,860 in a year. If I had no car, my net profit for the year would be around $0. If you think of things on a more positive note,, it's not so bad.