It’s no secret that buying a new car can cost you a lot of money, but beyond the price tag on the car, there are a lot of hidden costs to buying and owning a new car. This article aims to shed some light on some of the expenses associated with buying a new car and compares them to the costs associated with holding on to an older car for as long as. Armed with your new knowledge on the secret expenses associated with buying a new car, you might just see how valuable the old car sitting in your driveway really is.
Whether you want to impress your peers with a flashy new ride, you want the latest safety features and technology, are looking to help the environment, or you just want to change up your daily driver, it seems like the reasons to ditch the car you’ve been driving for years for something a little more polished are endless. Sure, the new car may have a high sticker price, but at least it won’t be in the shop as often, will last longer and will save money on gas, right?
Actually, that might not be the case. It’s not uncommon these days for cars to drive well over 100,000 miles with just a little love and care. By staying on top of things like oil changes, tire rotations and other regular tune-ups, it’s actually fairly common to avoid major repairs and drive for years without a car payment. Holding on to a car long enough to pay it off on its own is a reason to avoid a new car, as that already could be an extra couple hundred dollars in your bank account every month. But new car expenses don’t end with their monthly payment. Depending on where you live and what you want to drive, you could be spending a whole lot more on taxes, insurance, hidden fees and more.
Insurance, Depreciation and Fees
The first expense that’s quickly overlooked by new car buyers is the premium cost of insurance on new cars compared to old. Rates differ depending on driving record, location, etc., however in general you can expect to pay anywhere from $300- $600 more annually on insurance on a new car compared to the same model that’s five years older. You can expect to pay even more if the new car is a performance or luxury vehicle. Further, older cars sometimes have less strict insurance requirements. You can save a little extra money by getting less comprehensive coverage on an older car if you really want to stretch your dollars, where you might be required to get full coverage on a new car.
New cars are also plagued with much faster depreciation rates than older cars. As soon as you drive off the lot, you lose an average of 20-30% of the vehicle’s value in depreciation. After that, depending on factors like driving history, make, model, etc., you can lose another 10-20% in value every year. Although older cars still depreciate, you or the original owner took the initial hit driving off the lot already, and you don’t lose nearly as much in depreciation every year as you would in a new car.
The Secret Value of Self- Maintenance
New cars may have tons of hidden fees (like shipping fees, floor fees, advertising fees, etc. tacked on by the dealer), faster depreciation rates and more expensive insurance premiums, but surely, it’s worth it to have the warranties that new cars come with, right? Don’t old cars break down and cost thousands in repairs towards the end of their lives? Not exactly.
As stated earlier, it’s not uncommon for cars to drive for over 100,000 miles with just a little regular care. Many common repairs are actually fairly simple to do yourself, and you’d be surprised how much you could save by doing them at home. For example, you might pay $150 at a shop to have your brakes replaced. If you buy the brakes on your own, you could pay less than $50 for the parts and replace them yourself in about an hour. Taking care of minor repairs like this not only save money from avoiding service costs, but they keep your car in better health overall and decrease the chance that you’ll need a major repair later on.
If you’re looking to save as much money as possible on your car, holding on to your old car is certainly the way to go. Between hidden fees, higher insurance premiums, faster depreciation rates, and expensive interest rates and monthly payments, new cars bring a lot of expenses to the table besides a big sticker price. You can avoid a lot of these expenses by holding on to your current car for as long as possible; older cars have lower depreciation rates, often have lower taxes and registration fees, and driving a car that’s paid off can save you hundreds every month.
You can save even more money by taking care of minor repairs and maintenance yourself and potentially drive your car well over 100,000 miles before it needs to be replaced. Holbrook Auto Parts takes pride in providing the Detroit area with new and high-quality, tested used parts at affordable prices. Stop by one of our locations and see how much you can save on the parts you need to keep your car on the road longer!
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