The Driving Cost Of Your Car

Owning and operating a car costs more than the vehicle's purchase price and financing costs. If you already own a vehicle, you know that. If you are ready to buy a vehicle, you need to take these costs into account as you shop for the vehicle that's right for you. Comparing owning and operating costs along with other factors can help you make the wisest choice.

Consider these ownership costs:

1. Gas and oil
Every vehicle needs gas and oil to run, but some models drink lots more than others. You can get a rough estimate of these costs by using the mpg-ratings for the model vehicle and the cost of gasoline in your area to calculate a cost-per-mile figure.

  • You can calculate the exact cost for your car by keeping a record for several weeks: Fill up your tank, note the mileage and amount and cost of gasoline; when you fill up again, do the same. Record these figures each time you fill up for two or three weeks.
  • To figure mpg, divide the total number of miles driven by the total gallons of gas used.
  • To figure cost per mile, divide the total cost of the gasoline by the total miles driven.
  • For the oil costs, keep track of oil used as well as the cost and frequency of oil changes.

2. Maintenance and tires

What maintenance service does the vehicle require? When will the vehicle need tires and what will they cost? Also consider cost of balancing and rotating tires.

3. Insurance
Insurance is a huge cost for young drivers, who pay much higher premiums than other drivers, even when they are covered under their parents' policies.

Why? Because crash statistics show that beginning (college students) drivers are a significantly higher risk than other drivers. Rates decline as you get older, have more driving experience, and maintain a good safety record.

(Check out the joint study on younger drivers (especially 16-20 years old) from the Insurance Institute for Highway Safety and the National Highway Traffic Safety Administration.)

In addition, some types of vehicles, such as high performance cars, have much higher insurance premiums for all drivers than other vehicles. A number of college students have a higher monthly payment for insurance than for their vehicle. Car insurance tips for students gives pointers on how to save on these costs.

4. Registration, license and taxes
Yes, that auto license and registration cost money each year. Many states also charge an annual tax determined by the value of the vehicle. These costs can range from a few dollars for an older model to hundreds of dollars for newer luxury models.

5. Repairs
If you are driving a vehicle that's brand new or only a year or two old, repairs may be a fairly small cost, but on an older car they can come along regularly.

That's one reason that smart used car shoppers check a vehicle's reliability rating and have an independent mechanic or diagnostic service check out the vehicle before making an offer.

And don't think that just getting a service contract (or "extended warranty") will solve the problem. Not only do you have to include the cost of the service contract in the cost of operating the vehicle, but you have to shop and negotiate carefully for one because many such contracts are over-priced, big profit makers for the sellers, and offer little real protection to the car owner.

6. Depreciation
Everyone knows that a 2003 Expenso sedan is worth considerably more than a 1999 Expenso. That difference in value over time is called depreciation. Most people don't think about it, but that loss of value is a cost of driving. Car owners usually only pay attention to it when it's time to sell or trade-in their vehicle; then everyone would like to have a car that has kept its value as high as possible.

Calculate the cost of owning and operating a vehicle.

If you'd like to give the ownership costs of your car or potential car a test drive, check out the AAA Auto Club South. Their website also includes a Driving Cost Calculator that lets you check specific models.