Don't Forget to Budget for These Expenses When Buying a Car
Cars are expensive, and their massive price tag goes beyond the sticker price you see in the window at your local dealership. Drivers pay for a number of ongoing costs, so if you're in the market for a car, don't forget to
It's called total cost of ownership , or TCO-the total price you pay for a car over time. Manufacturers use TCO to help you better compare vehicles. Car A might be cheaper than Car B on the lot, but over time, once you calculate maintenance and other factors , Car A might actually be more expensive.
While TCO can reveal how much a new or used car will actually cost you, it can also help you figure out how to budget for these regular expenses, because paying for a car goes beyond a $200 monthly car note. This post will give you a rough idea of how much your car will cost you annually , depending on where you live, but these numbers are based on averages and your own (ahem) mileage will vary. If you're looking for a more accurate way to budget for your car, calculate these expenses, too:
- Car payment: If you don't know how much your payment is already, here's a simple calculator to help you crunch the numbers.
- Maintenance and repairs: Edmunds has a TCO calculator that will break down the year-by-year cost, depending on the vehicle. Of course, it's just an estimate, but at least it's based on your actual vehicle.
- Gas : This will depend on where you live, what kind of mileage your car gets, and how much you drive. Use the Department of Energy's Fuel Cost calculator.
- Registration, taxes, and fees : Many state DMV websites have a "tax & tags" calculator that will break the costs down for you. Here's one from CarMax, too.
- Insurance : You can look up a quote on your own pretty easily, but NerdWallet has a simple calculator that will give you a rough estimate based on your driving record and zip code.
Once you know how much a car will cost you every year, it just takes some basic math to figure out how much it'll cost you every month (y'know, divide by 12). Like any major purchase,