Are you planning to own a car soon? How is your financial situation? Remember, owning a car can change a lot of things in your house. In fact, if you are not yet stable financially, owning a car can be such a headache that you may end up selling it again, of course at a loss because of depreciation. When an economist tells you that owning a car is more of a liability, kindly listen to them.
So, what are the hidden costs of owning a car that you should know before contacting your favorite car dealership? Take a look of what is waiting for you:
- Insurance costs
There isn’t any authority in any jurisdiction that will allow you to drive around in an uninsured car. Moreover, if you also know the benefits of insurance then you wouldn’t even think about driving an uninsured car. Just to make it quick, your insurance cover has to be active for 365 days a year, and you must renew immediately after it expires. The reason why this is such a hidden cost is because you may end up not using the insurance at all, especially if you don’t knock anyone down or don’t get involved in an accident. In that case, that money will be gone just like that!
- Fuel consumption
Car maintenance firms will tell you that fuel is the most expensive thing. In addition to that, research by Kwik Fit shows how fuel consumption patterns in different cities of the UK vary and how they affect drivers. For instance, if you are buying a family car then you have to brace for bigger fuel expenses. Just to give you a snippet, carrying excess weight will have an effect on how much fuel you consume.
- Maintenance cost
Maintenance costs will depend on the type of car you’ll be driving. For instance, the maintenance costs for a Mercedes car will be totally different from a Toyota. And if your car doesn’t have spare parts that are available locally then brace for more shipping expenses. Also, it would be best if you took your car for regular servicing and there you’ll buy things like oil, coolants, brake pads, brake oil and even new filters.
Finally, you must know that a car is not like a piece of land or property that will appreciate its value over time. If you are buying it from an investment point of view then you are getting it wrong. For instance, it will be correct to assume that a brand new car will lose 20% of its original value within the first year. Later on, after 10 years, it will be worth about 10% of what it originally costs. So, when you do the math here, you should prepare to get tied down with your car for a long time or let it go at a lower price. Depreciation is a hidden expense that many people don’t know about. In fact, if you use your logbook to secure a loan this year, then the following year you’ll get a lower loan limit because of depreciation.