The real cost to own your car
Dollars and Sense
Every year since 1985, the American Institute for Economic Research has come out with a new edition of its book “What Your Car Really Costs.” If you’re about to shop for a car or wonder what your current one actually costs you, this book should be a piece of your information arsenal.
One of the first facts the book offers is something of a shock: The average American will spend approximately $320,000 on cars over a lifetime. That equates to 18 percent of a consumer’s income. The only thing that costs more is our homes.
The true cost of auto ownership isn’t limited to the price of the car. Add to that fuel and oil, repairs and maintenance, insurance, the cost of a loan or lease, depreciation (a significant amount in the cost of ownership), fuel efficiency and taxes, and that $320,000 doesn’t seem so far-fetched.
If you limit your auto cost calculations to what you pay in a monthly payment, you could be skewing the numbers in your personal long-term financial plan. For example: If the depreciation difference between two vehicles is invested instead of spent, that dollar amount could grow to well over $100,000. Between a modest sedan and a luxury car, that number climbs much higher.
“What Your Car Really Costs” walks you through a number of important steps.
•The use of Consumer Reports magazine auto information to compare models for reliability and road-worthiness. As the authors point out, CR’s “recommended” vehicles often hold their value longer.
•The true cost differences between owning a small sedan, large sedan, SUV or minivan.
•The resale value when it comes time to sell or trade in.
•Buying new vs. buying used.
•How to calculate the real meaning of promotional offers of low interest rates or rebates and how those translate into dollars.
•An explanation of MSRP (the window-sticker price) when it comes to buying.
•Understanding a lease.
•Auto insurance basics.
At the end of the book are charts to fill in with your own figures, as well as consumer protection contacts by state.
To order “What Your Car Really Costs,” see www.aier.org online or call 413-528-1216. Copies are $12 each.