As the data keeps telling us, an increasing number of people are now on the road. However, something which is perhaps kept under more under wraps is the true cost of owning a vehicle.
In short, particularly in the early years, the costs can be significant. Through today’s article, we will now take a look at some of the areas that you should keep on top of.
Buying the vehicle in the first place
The obvious one. The car, the motorbike, whatever it is, this will be your first big outlay.
The big question here is whether you buy new or used. If you use the vehicle for work, there are tax advantages to be had from buying a new one. However, you will need to do a long-term calculation of the costs to ensure that you do not end up paying more.
In the first years of ownership, you will be looking at depreciation costs. Here, you will need to consider the costs of maintenance, fuel and repairs.
For example, using the example of a car, according to data in the US, a new car will lose 12% of its value in the first year of ownership. In the second year, this figure is 20% and by the fourth year, it is around 45%.
The cost of insurance
Insurance is one of those areas where you can end up paying a significant amount of money, although it is more prohibitive for younger drivers.
However, as well as the obvious legal requirements, there are plenty of other side benefits of getting full insurance (rather than a basic type). For example, if you were to have an accident in Houston, some would support you in finding a Houston car accident lawyer, and you can do that at sutliffstout.com. These benefits can even go as granular as making sure your keys are insured – so auto insurance most certainly isn’t just the legal obligation that many make it out to be. It’s expensive, but very worthwhile.
Maintaining your vehicle
The third major area that you will need to consider is the amount of money that will need to be spent on maintenance and repairs.
The biggest problem that many people face is that this maintenance and repair work is not always done at the right time. This can then leave you with a problem of having to pay for the work now or waiting until it becomes more expensive.
Don’t forget the ‘small costs’ such as parking
Something else to consider is one of the so-called smaller costs.
When one first considers buying a car, it stands to reason that the main, upfront cost is the thing that plays on their mind the most.
However, over time, this is offset, and you instead have to cope with the smaller costs.
One of these is parking. For anyone who resides in a big city, we probably don’t need to say much more. The costs of parking in some cities across the US is staggering to say the least. Even if you have done your sums and realized that the fuel costs are more favorable compared to public transport, see what happens if you add parking into your calculations.
Quite often, it will tip you over the edge.
Granted, some areas are worse than others for this, but don’t discount these smaller costs.
The rise of the congestion charge
Congestion charges across the world are nothing new. After all, if we turn to London, this high-profile charge has been around for almost two decades.
The US has taken slightly longer to adopt such charges, although they are now coming thick and fast. In 2019, New York City announced that it would become the first city in the country to charge motorists in a bid to raise $1bn per year.
While the charge is not yet live, following years of wrangling, it has been approved and will be coming to roads in the very near future. The finer details of the scheme are yet to be announced, but for any vehicle owners, the impact could be huge. As we all know, the costs of parking in NYC are astronomical to say the least – if you then add a congestion charge into the equation the situation could become unaffordable for many motorists.
Of course, New York is the only city that is currently opting for such a route but one would assume, over the next few years, that this could become more mainstream across other regions.
You don’t get taxed… but you still have to register your vehicle
In some parts of the world, the cost of taxing a vehicle can get hugely expensive. For example, in the UK, older vehicles which are more damaging to the environment can have huge levies associated with them.
When it comes to the US however, there are different costs. While there is no federal road tax, each state has its own set of registration fees.
We’re not going to dive into each and every type of fee – there are too many to go over. However, to provide some context, if we were to look at the state of New York as an example, your vehicle will be taxed on its weight. In other states across the country, you’ll instead be charged on its value.
Let’s not forget that these are ongoing, annual charges. It means that over time these charges can become a serious financial drain – this isn’t just about paying that hefty initial cost.
The cost of fueling your vehicle
The final area that we are going to look at is the cost of fuel.
It is important to note that there are two elements to this. The first is the cost of the fuel itself. The second is the cost of the miles that you drive.
Fuel is always going to be costly, but it’s about looking at your other alternatives. For example, if you are using a vehicle for basic trips around the city, how does the cost of fuel compare to alternative methods of public transport?
Or, what if you are using your vehicle for more long-haul journeys? If you were to pit this against a train, or a even a flight, what’s the cost breakdown?
Calculating this can help you gauge your true cost of journeys and whether a car is worthwhile.
