Financial Reflections

How much does your car cost? It’s not as simple of a question as one might think. As I wrote previously, my car was in for repairs and it gave me a chance to reflect on the costs of car ownership. It all started when I contemplated trading in my beautiful 1994 Volvo 850 wagon for a new car. How much would that new car cost me?

Here’s my breakdown of what a car really costs. It made me change my mind for a while on getting that new ride:

1. Gasoline/fuel. This is a big one these days. The shop let me use a free loaner car (I was excited until I found out it was a 1998 minivan) as the parts took a few days to come in. I drive about 40 miles one way to work (I’m not exagerating) so I ended up putting 80 miles plus a few extra for errands on the loaner. Part of the deal was to pay for the gas I used and then it really hit me at the pump. I used just under 5 gallons of gas in a day, which was bad enough, then I realized it was $20 to pay for a day’s worth of gas! If I drive to work (I’ll get to that later) It will be $100 per week.
2. Repairs. It was $330 to fix my air conditioning this time. I’ve also needed $1000 to fix other problems this year, so I’m right around $1300 dollars in 6 months for repairs. That sounds painful, but I considered the other option — of owning a new car under warranty, and my payments end up lower than all but the cheapest vehicles.
3. Maintenance. I separated this from “repairs” because it is something that both new and used car owners have to think about. Oil changes aren’t too bad, but keeping up with the regularly scheduled maintenance as outlined in the owners manual can start to really add up, especially at the higher millages — 30,000 miles or more.
4. Payments/Down payment. I don’t have payments on my commute car, but a reasonable car looks to be around $300 a month — if I take a long term loan. “Nice” cars cost hundreds more and then there’s the matter of handing over a down payment, if only for taxes/tax/title.
5. Insurance. Insurance on my paid for car is low. Insurance on new cars is high. I’ve known a couple of people who only considered monthly payments for their cars then were in for a shock when the insurance bill came due.
6. Taxes/Tags. I live where there is this pesky thing called “ad-valorem” tax. In short, the more your car costs, the more your taxes are. A friend of mine complained about his $600 dollar tag fee one year. I paused for a minute and then asked him what kind of car he had. “A brand new Audi,” he replied, obviously not doing the math. I don’t think the ad valorem tax is used everywhere, but here, if you want to play, you’ve got to pay.

So as you might have guessed, I held off a little longer on that new car. With the new repairs, i think I can get another year or two out of the 850. By then I’ll have enough to go after a new car or maybe another used one purchased outright again.

In the mean time, I’m fortunate enough to be involved in a $50/month commute program that gets me a ride to and from work each day. In three days a month it pays for itself and keeps miles off my already fragile car. That’s certainly worth looking into if you have a long commute.

What other car costs have you found? Let me know in the comments below: