When it’s time to purchase a vehicle, whether new or used, it’s important to pay attention to more than the purchase price. Of course, that’s the primary expense, so let’s first take a look at the monthly car payment. According to Experian, for 2017, the average payment for new vehicles is $506 and $364 for used vehicles. Whether new or used, car payments vary based on your credit. If you’re going to purchase a car soon, you’ll benefit if you pre-qualify for a car loan before visiting the dealership.
AAA has been studying the total cost of car ownership since 1950. According to the organization’s 2017 study, it costs nearly $8,500 annually, or just over $700 monthly, to own and operate a new vehicle beyond the actual purchase price. For new vehicles, AAA accounts for fixed costs such as finance charges, insurance, depreciation, as well as the variable costs of fuel and maintenance. Used vehicles incur additional expenses too.
If you’ve purchased a new car, you’ll want to consider depreciation. Unfortunately, you’ll lose an average of $15,000 in value over the first five years according to AAA. Some vehicles depreciate more quickly than others. If maintaining value is important to you, possibly a small sedan or small SUV is best, both depreciate more slowly than other vehicles. Not surprisingly, electric vehicles depreciate at the quickest pace, followed by minivans.
As for the annual variable costs of car ownership, the largest this year is fuel. This expense varies greatly depending on the type of vehicle and gas. AAA derived a standard, determining Americans spent, on average, $1,500 to fill their tanks.
We also look to AAA for average maintenance and repair costs per year, which is $1,186 for 2017. This figure includes regular maintenance such as oil changes and replacement parts like new lights, batteries, and tires in addition to more complicated repairs.
Regarding used cars, the purchase price, and therefore loan value, will decrease compared to a new vehicle. Insurance and depreciation costs will be lower with used vehicles as well. Maintenance costs may be higher, however, in the end, you can save substantially by buying a used vehicle.
Thinking of buying soon? Visit Carloan.com and use the convenient tools and calculators to estimate the value of a car loan, calculate your income, and discover your possible car payment. Be informed before going to the dealership and get the offer you deserve.
Note – There may be minimal monthly cost overlap of finance charges. This charge was factored into both Experian and AAA studies.