What your paid-for car is costing you
The cost of owning a car is going up -- even if you're through with car payments, it's still costing you more to drive.
This post comes from Tara Baukus Mello at Bankrate.com.
If you own your car outright, you might not think it costs you that much to own it, but AAA's 2013 Your Driving Costs study shows that costs range from nearly $7,000 to more than $11,000 for the average American, depending on the kind of car driven.
What's more, the cost of owning a car is rising, which means it's costing you more money to drive your car year after year even though it's worth less and less.
Taking a look at the 2013 study provides some eye-opening data that may make you think twice about the kind of car you own, your driving habits, and whether you should shop around for auto insurance or the lowest gas prices.
Different car types equal different costs
AAA calculated the average costs for six different car types based on the ownership costs in the study. It found that the average cost of all sedans -- the majority of cars on the road -- is 60.8 cents per mile or $9,122 annually, based on 15,000 miles of driving. Small sedans cost the least -- $6,967 annually. Four-wheel-drive sport utility vehicles cost the most -- $11,599 annually -- largely due to the fuel costs of those cars. Perhaps surprisingly, large sedans cost almost as much -- $11,248 -- as four-wheel-drive SUVs, while minivans, which often have about the same amount of passenger and cargo-carrying capability as many SUVs, averaged just $9,795.
Depreciation doesn't compensate
In last year's study, depreciation rates had slowed significantly, making cars worth more and partially offsetting the increases in ownership costs. According to the 2013 study, depreciation rose 0.78% to $3,571 annually on average. AAA attributed this to an increase in used cars available, which has softened resale values.
Next, for other ownership costs, we'll focus on the sedan as our example.
Maintenance costs jump
The AAA study found that there were significant increases in the cost of labor and parts over the past year. As a result, average maintenance costs are up by 11.26% on average for sedan owners, the largest percent year-over-year increase, to 4.97 cents per mile. Included in that figure are the labor and parts costs to maintain and repair the car for five years and 75,000 miles as well as purchasing an extended warranty. AAA noted that figure also has increased due to increases in extended warranty prices -- the result of high losses by underwriters.
Insurance costs more, too
While AAA notes that auto insurance rates vary widely due to numerous factors, car insurance is rising 2.76 percent to $1,029 annually for the average sedan owner over 2012. To arrive at its average, AAA used a hypothetical low-risk driver with a clean driving record and obtained quotes from five AAA clubs and insurance companies representing seven states.
Fuel costs rise marginally
While gas prices have continued to rise, fuel costs are up only slightly, partially offset by improvements in car fuel economy. The average cost for regular unleaded gasoline is up 3.84%, but due to improved fuel economy, fuel costs have risen just 1.93% to 14.45 cents per mile on average for sedan owners. For its calculation, AAA uses the national average for regular, unleaded gas in the fourth quarter of the prior year.
Tire costs remain stable
After an increase in the 2012 study, tire costs have remained stable this year, as manufacturing and shipping costs for tires have leveled off. The average sedan owner pays a penny per mile for tires.
More from Bankrate.com:
- Top sporty used cars for under $25,000
- 8 car maintenance moves to make
- Busted fuel-economy myths to save on gas
I'll take that any day and those of you who want to be enslaved to a $500 per month car payment + astronomical insurance rates...Have a LARGE time.
1996 F-150. 215,000 mi. I-6 that I can squeeze 25-30mpg long distance (Ok, I drive a bit slow). Its American, so replacement parts are cheap, which I replace when worn out, maybe $150-$300/year average. I owe nothing on it. I pay $25 monthly for insurance since its only worth $2,000 tops. I have power everything, air/heat, stereo, passenger seating and 36 square ft of cargo space... Tell me why I need a new car?
I'm not impressed when someone drives around in their fancy brand new car that they try and show off, but my nearly 20 year old truck gets compliments from every single mechanic because it takes a lot more than money to show a vehicle you love it.
Ooops, I think I went off topic.
The continued rising cost of fuel (raping of the country by the oil industry) is THE biggest cost now. "Fuel cost rising marginally"???? Bullsh*t!!!!!!!!!!!!!! Other than that, it doesn't cost any more now to own a vehicle than any other era.
I comprehensively tally my auto expenses annually for income tax itemization. I drive about 15,000 miles and spend about $3,500 to $4,000 per year. The car looks and runs great, is long ago paid off, and depreciation is no longer an issue. I'm a happy man and plan to drive the thing until the engine blows or it rusts out.
Actually I think my paid off truck and car are really cheaper than buying a new one. In my state costs are in this order without the payment of $229 to $400 plus depending on what I buy.
1. Insurance goes up by a lot in almost 500 to a 1000 a year depending on what I buy,
2. Excise tax increases almost as much as insurance. Yes there is excise tax where I live, this tax can 2 to 4 times as much as my used car and truck.
Just with these two increases and the payment.....NO! I think almost any repair would be cheaper on my older vehicles except maybe the engine replacement or the transmission replacement, so this article is total bull.
The author of this article is wrong. Drop the insurance coverage to liability and enjoy a car without payments for as long as it's practical.
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