All drivers are acutely aware that gas prices keep going up every time they pull in at a service station to fill up their tanks. What most people don’t seem to realize however is that the cost of car ownership in general is also going up. According to a recently released report from AAA it is more costly today to own and operate a motor vehicle than it has ever been. Gas of course is one of the most obvious reasons but there are several other factors that are making car ownership more expensive as well. With that in mind we put together a blog for you, our dear readers, that will hopefully help you to keep the cost of owning your car as low as possible even as gas prices keep going up. Enjoy.
Interestingly, the cost to maintain and insure a car is actually going down. Most cars of today are much easier to maintain and there are plenty of service stations so competition for driver’s dollars is high and prices are stable and competitive. The question is then, what exactly is causing the increase in car ownership costs? The answer; the increase in gas prices (duh) as well as the increase in both tire costs and depreciation costs.
When it comes to gasoline the reason that prices keep going up is probably not exactly what you’re thinking. Yes the world supply of oil is declining and yes there is unrest in the Middle East (isn’t there always?) but in fact the rising cost of gas has more to do with what’s happening on the stock market in New York than anything that might be happening in Libya, Iraq or other Middle Eastern countries. The reason is simply this; on the New York Stock Exchange you have speculators making huge bets on oil prices every single day and these bets cause prices to sometimes swing wildly up-and-down. (Mostly up it seems.)
When it comes to gas the best bet that you have is to either buy a more fuel-efficient car, use your car less or go back and read one of our various blogs about the best tips and advice for lowering your gasoline usage. Frankly, gasoline prices are completely out of the average consumer’s hands and, unless you own a gas station, you’re just going to have to deal with whatever prices that they give you.
Another reason that the cost of car ownership is increasing Is that the cost of raw materials, energy and transportation (due to rising gas costs) have all had notable increases in the last two decades which has led to increased tire prices. When you combine that with the fact that many automakers tend to equip their cars with premium grade tires right out of the box you have a trend that makes car ownership a little bit harder to swallow.
There are a number of ways to deal with this including asking for moderately priced tires when you purchase a new car as well as taking very good care of the tires that you already have so that they last as long as possible. Simply put, ignoring your tires and not checking to make sure that they are properly inflated as well as not having them rotated on a regular basis is going to ensure that they wear down more quickly. Once that happens you’ll have no choice but to buy new ones and new tires these days are so expensive that you practically have to take out a second mortgage on the house to get a full set of 4.
Lastly we have depreciation which is basically the slow loss of your cars initial value. AAA notes that depreciation is the single largest cost for motor vehicle owners but is also one of the most frequently overlooked factors when a car buyer goes to determine the actual cost of owning and operating a specific automobile. Pair that with the fact that a typical new car loses about 40% of its value within the first three years and you can see why many financial experts are advocates of buying used cars instead. We recommend that as well and, if you do your research and use your common sense, there are plenty of opportunities to buy excellent used cars and reduce the financial loss of depreciation greatly.
We mentioned above that insurance and maintenance costs are actually on the decline but frankly that’s no reason to ignore them completely. Raising deductibles to their highest levels, making sure that you get all of your discounts for good driving habits and doing an annual revision of your automobile insurance are all excellent ideas to make sure that you’re not overpaying.
As far as maintenance is concerned you should simply make sure that you maintain your car at a high level and have a good relationship with your local maintenance and repair shop.
One last bit of advice; if possible don’t borrow money to buy a car. Financially speaking, borrowing money to buy an asset that depreciates is a big no-no. If you have no choice try to borrow as little money as possible and pay it back as soon as you can.
With the cost of gas taking such a bite out of your budget using the information and advice above to keep your ownership cost down is going to help you a lot. We humans certainly love our automobiles but that doesn’t mean that we have to let them run roughshod over our finances.
We hope that our blog today has been, at the very least, enlightening and that you come back and visit us again sometime soon. Until then, take care and happy driving.