The Real Costs Associated with Buying a New Car
Once the excitement of owning a brand new vehicle wears off, the real cost of buying a car might surprise you. Monthly car insurance premiums and title and registration fees can put a crack in your finances if you aren’t prepared for the real costs associated with buying a new car. Read our guide below to set your budget right before buying a new car.
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UPDATED: Nov 6, 2020
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Buying a new car can be a huge financial responsibility. Not only do you assume the payments for the car, but you also have to take responsibility for all of the associated costs, including fuel, tires, oil changes, and more.
Insurance alone will end up being only a little less than the amount of the car payment by the time the loan is paid off, and if you have a few smudges on your driving or credit history, the cost could be higher than what you pay for the car.
The average cost of owning a vehicle changes according to many factors, including the make and model of the car, how much you intend to drive, and what your driving history and credit score look like.
If you only plan to drive the car, for example, on weekends, then your costs will be substantially lower than someone who commutes 50 each way 5 days a week. Not only do your maintenance costs increase with the number of miles you put on, so will your insurance.
Car insurance is required by law, and each person pays a different premium based on more than a dozen factors. A safe driving record will help you get cheaper car insurance, as will a credit score of 650 or more. The key is to purchase sufficient coverage but to avoid buying more insurance than you really need.
When trying to calculate the amount of coverage you need, keep in mind the bodily injury can be extremely expensive and that the standard car insurance policy is not up to paying for injuries where several people have serious injuries.
Without car insurance, you would be responsible for paying these costs out of pocket, so go ahead and pay a little more to get coverage you can count on.
Cars have to be registered, and most states require your license plates to be renewed each year. This cost includes the price of the renewal plus any inspections your car needs before the registration can be made.
In all, annual registration will end up being one of your lowest associated costs, but it should be considered from the outset as one of the many
different costs associated with buying a new car.