The Hidden Costs Of Owning A Car
Owning a car is about much more than the paying for the purchase price. Hidden car costs often have consumers confused, upset, and feeling like they can no longer afford the car they desire. These fees are a factor whether the car buyer is purchasing a new vehicle from a dealer or buying a used vehicle online. Some hidden costs may crop up before the car is driven off the parking lot, others, however, only show up over time. Consumers should understand and be prepared for these 15 hidden car costs when shopping around for their first or next vehicle.
- Collectible Car Insurance: Everyone knows that car insurance is required when buying a vehicle. However, many car owners may not realize that the type of vehicle they own may require a more specialized type of insurance. Those who buy classic, antique, or high-end sports cars, the type of vehicles mainly used for car shows and other events, will usually need a separate policy to cover these vehicles. There are also likely to be requirements on how the car is stored and how many miles it can be driven each year.
- Interest: A car is a large scale expensive that most people cannot afford to make without financing. When a car is financed car owners will have to pay for not only the agreed upon asking price, but also the interest charged. Car shoppers can find different interest rates depending on if they go through a bank, credit union, online lenders, or get a car loan right from the dealership. Even a small change in interest rate offered can mean a significant hike or reduction in the total price paid for the vehicle.
- Credit Issues: Not everyone who buys a car can qualify for a loan. Those with mediocre credit ratings may not be eligible to receive a loan, or if they do, they will likely be paying higher interest rates and qualify for smaller loan amounts. Although the cost to consumers of getting a copy of their credit history and a credit score may seem insignificant, for some car shoppers this is only the start. Those who decide that their credit is too low to get the loan they need may run up additional cost by enlisting the services of credit-counseling organizations or by paying down credit cards to increase their amount of available credit.
- Roadside Assistance: Many consumers get roadside assistance service as part of their car insurance. However, consumers can get rid of this extra expense by getting roadside assistance through an auto club, oil company, and from plans offered with their cell phone service.
- Depreciation: A new car begins to depreciate in value the moment it is driven off of a dealership lot. This is an important fact to know because most consumers will keep their car for a few years and then trade in for a newer model. Therefore, the depreciation value of the vehicle will determine its trade-in value and how much can be shaved off of a new vehicle purchase. To make a good investment, car buyers can research resale values of new and used vehicles.
- Leasing Fees: Leased cars typically have lower monthly payments, but they may also have a lot of unexpected fees. For instance, leased vehicles have an annual mileage cap and drivers are charged a particular rate for every mile that they go over this limit. Leased vehicles also typically require more comprehensive and expensive insurance, and if the lease is terminated early there are often high penalties to pay.
- Fuel: Although there are some cars on the road that use alternative fuel sources, the vast majority of vehicles being driven are running on gas. Different types of cars also have different fuel needs. High end sports cars for instance usually require the more expensive premium gasoline. The cost of a gallon of fuel can also fluctuate widely. Learn the gas mileage that the vehicle gets and the grade of fuel recommended by the owner’s manual before finalizing a purchase. Considering the average amount of miles likely to be driven in a month will also help car owners prepare for this cost.
- Tires: Because any new car will come equipped with tires it can be easy to ignore this cost of car ownership. Tires that are not in good condition, however, can lead to reduced gas mileage. It can also lead to poor handling of the vehicle and hazardous conditions when driving in the rain, snow, or other wet conditions. Costs of maintaining tires can include having them rotated and inflated. Tires will generally have to be replaced at 40,000 miles.
- Oil: A cars owner manual will generally include guidelines for when the oil will need to be replaced. If the oil is not changed in a timely manner it will break down into sludge, a gel like residue that can clog up the engine affecting gas mileage, causing gaskets to fail, and in more severe cases requiring an engine replacement. For most vehicles, the oil needs to be changed between 5,000 to 10,000 miles.
- Repairs: Most individuals do not think to set aside funds for car maintenance. Although new and used cars sold by dealers come with warranties, these warranties do not cover everything. Most car warranties do not cover damage caused by negligence such as texting while driving, modifications made to the vehicle with non-factory made parts, and damage caused by lack of recommended maintenance.
- Parking: Very few car owners think about how much they will have to pay in parking. Hospitals, universities, malls, airports, and sporting events commonly feature paid parking. Paid parking lots and using parking meters are another aspect of parking prices that drivers must consider. Even those who live in less densely populated cities and regions may want to add a garage to their homes to protect their vehicle against theft or bad weather.
- Antitheft Devices: As cars are such an expensive purchase, some car owners find they need some protection against theft. Those who live in urban areas and have newer model vehicles are at a greater risk. Steering wheel locks, kill switches, alarms, and vehicle tracking systems are some of the options. The more advanced options can add hundreds of dollars to the cost of car ownership.
- Dealer Fees: Dealers can tack on a lot of fees that car buyers did not expect. They may charge fees for washing the car before the new owner takes it home, marketing fees, and fees for the necessary paperwork. Many of these fees can be negotiated.
- Emission Testing Fees: Emissions certification and testing is done to ensure that cars meet the minimum guidelines set forth at the federal and state level to control harmful emissions. Many states require drivers get this testing done, and most also require annual inspection.
- State Related Taxes: Car owners will have to pay a sales tax when buying used and new vehicles. Sales taxes differ by state, and since taxes for cities and counties also differ, it tends to vary within a state. Vehicle registration fees will also apply and cover costs associated with getting the title, registering the vehicle and getting the license plates. This fee goes to the Department of Motor Vehicles in the state of residence for the car buyer.