The True Cost of Car Ownership

Salespeople focus on the monthly payment. "For just $399 a month, you can drive this today." But your wallet leaves the dealership paying much, much more.

1. Depreciation: The Silent Killer

Depreciation is the money you lose but don't "spend" each month. If you buy a car for $30,000 and sell it 5 years later for $15,000, that car cost you $250/month in depreciation alone.

2. Insurance

For young drivers or new cars, this can easily rival the car payment itself. $150-$200/month is standard. ALWAYS get an insurance quote before buying the car.

3. Fuel

Driving 15,000 miles a year at 25 MPG means buying 600 gallons of gas. At $3.50/gallon, that's $2,100 a year, or $175/month.

4. Maintenance and Repairs

Oil changes, tires, brakes, and unexpected repairs average out to about $100/month over the life of the car.

5. Finance Charges

If you have a loan, you're paying interest. On a $30,000 loan at 7% for 6 years, you'll pay over $6,800 in interest. That's almost $100/month just for the privilege of borrowing money. Use the Loan Calculator to see total interest paid.

The Total Tally

Let's add it up for a typical "affordable" car:

• Loan Payment: $400
• Depreciation (Hidden): $200
• Insurance: $150
• Gas: $175
• Maintenance: $100
• Total Real Cost: $1,025/month

That $400 car actually costs you over $1,000 a month. Budget accordingly!