5 Extra Costs To Consider When Buying A Car

Cars in dealership lotYou’ve thought about it long and hard, saved every penny you could, and now you’re ready to buy that car you’ve had your eye on.

Before you rush to the nearest car dealer to sign the paperwork, it’s a good idea to know what the true cost of owning a new ride will be—beyond the sticker price. You want to be sure you understand all the expenses surrounding your vehicle purchase before you buy. Here are some important things you should consider when gauging the cost associated with the car you have in mind.

1) Car insurance

One thing you can be sure of is that you should insure your vehicle. In fact, it’s required to legally operate a vehicle in most states. Many factors play a role in determining insurance premiums, such as the make and model of car, the year, and how much overall risk is involved in insuring it. But you can easily get a quote ahead of time for a car you have in mind. It’s a great way to predict what your costs are going to be on a monthly or bi-annual basis from here on out.

2) Gas mileage

As gasoline prices fluctuate with the ebb and flow of the economic climate, it’s difficult to predict what gas is going to cost 3 or 4 months out from now. What you can predict is how much gas your newly purchased vehicle is going to consume on a daily basis, depending on your route. Factoring in your car’s consumption of gas, as well as best and worst case scenarios in terms of gas price changes, is a great step in anticipating its true cost to own.

3) Maintenance

Let’s face it, all cars eventually begin to wear and tear. Keeping them safe to drive and in tip-top shape can mean shelling out a chunk of change for parts and labor when you least expect it—sometimes more, sometimes less. The origin and make of a particular car can make a big difference in the cost of fixing or replacing parts, so be sure to take that into consideration when picking out your new baby.

4) Depreciation

Depreciation is a decrease in value of your car due to wear, tear and time. A wise car shopper understands that the value of a car drops as soon as it’s purchased and driven off of the lot.  If you’re looking forward to a good resale value later on down the road, just be aware that a new car will lose 15-20% of its value each year that you own it. Perhaps last year’s model is looking a little better now, after all.

5) Financing

Finally, one of the most subtle costs of owning a car that can make or break the bank are the finance charges. The difference between a low and high interest rate can really add up, especially over the course of five or six years. If you play your cards right, come to the table with a good down payment, and find the best rate possible, you can end up saving yourself hundreds, if not thousands, every year on borrowed money for your next ride.

Want to save time and money on your next car purchase? Use the GEICO Car Buying Service powered by TrueCar. See what others paid for the car you want and lock in dealer-guaranteed savings on new cars, plus discounts on used cars. Plus, every reported purchase from a TrueCar Certified Dealer comes with extra benefits including Auto Deductible Reimbursement. See how much you could save on your next car today.

Be sure to explore other sections in GEICO More to learn more tips on how to save in your day-to-day life.

By Steven Scott

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  1. Jeff Berkovatz says

    If your buying a new car and making monthly payments if you have to have full insurance on your car I didn’t tell you that either

  2. Rob Palmer says

    Some states, such as Maine, base registration fee upon optional accessories upon the specific auto. Therefore, in purchasing a new auto it is important to know what is taxed, and if a simpler version or model is available for less fee each year. GEICO could be helpful to residents of each state by revealing in a booklet what the owner might not opt for in a new auto. This info is sometimes hard to find from the state, which is seeking more money.

    Sometimes these options do not enhance safety, and are things one can do without. E.G.: My vanity mirrors on the sunshades with lighting. Am I paying for these each year ? ? ?

  3. Malcolm Crow says

    You have left out a massive addition to the windshield price… SALES TAX & REG TAX…..
    Why have you done that?
    These taxes costs so much in California..

    That’s a serious omission and reduces the value of your publication

    • anonymous says

      That would not be an unexpected cost, since it is REQUIRED for each sale. Each of the items listed, is unexpected due to the change in vehicle and can vary from one to another.