The True Cost of Owning a Car
Determining the total cost of owning your current car or one you’re considering purchasing is the best way to ensure your automotive budget remains manageable. However, as car ownership expenses cover multiple variables, it can be challenging to pinpoint the exact financial impact of owning a car.
Here are some key factors to consider when assessing the typical costs associated with car ownership.
Monthly Interest Cost
A crucial aspect in determining the total ownership costs of a vehicle is understanding the affordability scenarios based on the vehicle’s price. Given that many car buyers opt for car loans to acquire a new vehicle, it’s vital to grasp the impact interest rates and service fees will have on your monthly payments, as they can significantly affect the overall cost of your purchase.
Making an upfront deposit reduces the financing amount but leads to higher monthly premiums. Conversely, if low monthly payments are a priority, extending the loan period is an option, but bear in mind this choice comes with a trade-off – an increase in the total interest you’ll ultimately pay.
You need to balance these factors and ensure they align with your financial goals and priorities.
Insurance Costs
This varies widely depending on factors like the selected coverage and the type of car you drive. The finance facility you choose for your car loan might provide a quote for insurance, but you have the freedom to explore other options and find the best insurance deal available.
Keep in mind that insurance premiums may rise annually, so consider your budget for the next five or six years when selecting an insurer. Additionally, pay attention to the excess amount. Opting for a low premium doesn’t make sense if a claim results in a substantial upfront payment to repair or replace your car.
Fuel Costs
Fuel costs comprise the most considerable portion of money spent on running a car. Regularly refuelling your car is an ongoing financial commitment, subject to fluctuation in fuel price and your vehicle’s fuel efficiency. Therefore, it never hurts to calculate your fuel consumption.
Service Plans and Maintenance
Maintaining a car can be costly, even with a service plan. Such plans cover regular services and certain parts for a given period, such as three years or mileage.
Ensure you understand the coverage, as not all services may be included. If you don’t have a service plan or your plan lapses and choose not to reinstate it, consult the dealership for service cost details, including technician rates, consumables like oil and tire changes, and pricing for replacement parts.
As you can see, the costs can really add up! It’s worth considering all these factors and making a budget that covers both the fixed and variable expenses associated with car ownership.
We’re here to assist you every step of the way in your car ownership journey. If you have any questions or need further information, please don’t hesitate to contact us. Our experienced team is ready to provide the guidance you need to help you make the best choices for your automotive needs.
