Quote:
Originally Posted by IrishIllini
People often underestimate the true cost of owning a car. Gas, insurance, maintenance, city/parking permits, parking, license plate renewals, etc. all add up. The payment alone can easily hit $300+ per month for a not-so-flashy car. Additionally, People think that roads are cheap to build, operate, and maintain and that transit is expensive to build, operate, and maintain.
|
Definitely.
Even a cheap used car that's reasonably reliable has costs.
About 10 years ago a friend of mine bought a used Infinity sedan (I30). He paid $6,000, so taxes were about $420. IIRC registration was $101. So that's $521 lost. If he sold it himself today he could probably get around $2,000, so $4,000 in depreciation over 10 years. He doesn't drive it that much, maybe 6,000 miles per year. His insurance is about $1,000 per year.
Costs over 10 years:
Depreciation: $4,000
Registration: 10 * $101 = $1,010
Sales tax: $420
Insurance: 10 * $1,000 = $1,000
Fuel (30mpg mixed @ 6,000 miles per year): ((6,000 * 10) / 30) * $3.00/gal = $6,000
Oil changes (annual, synthetic oil): 10 * $50 = $500
Repairs: It's been a very reliable car for him, but I think he's spent about $1,200 in repairs
Tires: $300
Street parking around town: about $20 per month
Misc maintenance: $20 month
Total cost of ownership over 10 years: $19,230, or $160.25 per month averaged over 10 years. Which is actually not that bad, but is still well above the cost of a monthly CTA pass.
I think that is reasonably about the cheapest ownership costs anyone could expect for basic car ownership. Start driving more, having a newer vehicle, financing the vehicle and requiring more than the legal minimum insurance and the prices go up quickly from there. A lot of people spend up to $20,000 on a car, do trade-ins, and finance most of the cost.
Say you got a 3-year-old Camry for $17,000 and keep it five years and finance $12,000 of it for five years, use it for commuting a total of 30 miles a day (15 miles each way), and about the same amount of other driving for 1200 per month.
Depreciation (price paid - ending trade-in-value): $17,000 - $4,500 = $12,500
Registration: $101 * 5 = $505
Sales tax: $1,190
Insurance: $100/month * 12 * 5 = $6,000
Fuel (30mpg, $3/gal): about $100 per month = 12 * 5 * $3/gal = $6,000
Oil changes (every 6k miles): 6 * $50 = $300
Repairs: $1,200
Tires: $300
Parking: about $50 / month = $3,000
Misc maintenance: $20 / month = $1,200
Interest on payments, financing $12,000 over 5 years @ 4%: $1,260
That comes to almost $560/month. Not all of that is cashflow, but includes $221 in payments, $100 in insurance, $120 in gas, $50 in parking, so "normal" monthly fixed expenses if they pay insurance monthly are about $491 in cash outlays, monthly. Probably a lot of people have to budget that much, plus save for repairs and oil changes and the difference between the trade-in value and the downpayment they'll need when they get a new-to-them car at the end of the cycle. And if you want a nicer car, costs just go up from there. And if you want a *new* car, all bets are off.
New Audi A4, mid-range options, keep it for 8 years: $42,000 to buy otherwise same as above except has to garage it at home in the city @ $120/month in addition to non-home parking, takes very good care of it and has a $6,500 trade-in value at the end. Finances 80%.
Depreciation: $35,500
Interest: $3,528
Registration: $808
Sales tax: $2,940
Insurance: $12,600 ($150 per month while financed, $100 per month after)
Fuel (25mpg, $3/gal): $13,824
Oil changes (free first 3 years, every 6k miles): $600
Repairs: (for last 5 years) $4,500
Tires (replace twice @$200 per tire): $1,600
Parking: $50 + $120 monthly = $16,320
Misc maintenance ($50/month in last 5 years): $3,000
So, a total cost over 8 years of $95,220, or just under $1,000 per month, on average. And in the first five years, monthly cash outlay itself will be about $1,100 per month. Later in the ownership period, monthly cash outlay will drop dramatically, but maintenance will be higher. This is the kind of car I'd want if I had a car. But the numbers are why I won't do it, lol.