Planning To Buy A Car?

Posted by Richard on May 23, 2024

It is so easy to buy a car that it is hard to remember what an expensive move it is.

According to Kelley Blue Book, the standard down payment on a car is 20 percent. Everyone knows that you aren’t actually required to put down that much, but what most don’t consider is that the more you put down on the car and the faster you can pay off the loan, the less money the car costs overall. One driving cost report found that people who purchased a car in 2023 paid an average of $1,253 in financing costs every year. Over five years, that is $6,265, according to Go Banking Rates.

Car insurance is the next big category. According to AAA, an under-65 driver with six years of experience and no accidents pays an average of $1,765 per year for full coverage. Adding GAP insurance, which covers the difference between what your car is worth and the balance you owe on the loan, can cost up to $700.

We can’t forget fuel. The average price is $3.99 per gallon, according to AAA, which breaks down into about 16 cents per mile. For every mile you drive, you also rack up about 10 cents in maintenance, tires and repairs over five years.

Keep in mind that cars are never an investment on their own. The average vehicle loses $4,538 in value per year, or $22,000 over five years.

Still, most car buyers must have a car. The best financial move is to pay as much as you possibly can up front for a car that is what you actually need.