How to Calculate the True Cost of a Car

Car SalesWhen you’re in the market for a new car, the process of comparing your options can be quite enjoyable. It’s an excuse to read up on all of the latest reviews and news, leaf through glossy brochures and hobnob at auto shows. You may already have a predefined budget in mind and a definite list of features that you consider must-haves in any new car. What do you do when you have narrowed down your choices to two or three key contenders, which seem to offer the same features at the same price? At this level of the process, you’ll need to dig a little bit deeper to find out what distinguishes one from the other. In many cases, this can end up being a factor that’s hard to see at first: the overall cost of the car over time.

Running Costs

There are many hidden fees inherent in owning and operating a car. Naturally, you’ll need to first consider the up-front cost of the car and insurance rates. Beyond this lies a whole world of future costs, depending on your usage patterns and vehicle efficiency. To find out the true price of a car, you’ll first want to figure out the combined sticker price and cost of insurance. Insurance companies weigh a variety of factors into their decision, including the type of car you drive. For example, one reason Opel Astra sales are high at the moment is due to the fact that this car continually ranks as one of the easiest cars to insure. Any car with a high safety rating and decent security system will incur lower insurance costs over time.
Fuel costs are also important to consider, so you’ll want to compare fuel economy carefully. Smaller vehicles, hybrids, or those with diesel engines will cost you less at the pump. Don’t forget to look at the cost of repairs when you are calculating running costs. Models with rare or hard-to-find parts could be quite expensive to fix should something go wrong, and will most likely incur higher insurance rates as a result.

Resale Value

Unless you plan on keeping your new car forever, you’ll probably end up trading it in at some point. Although it’s inevitable that it loses some of its value, some cars retain their value more effectively than others. Try to buy Audi A6 on Carsales or another model which retains over 50% of its value over three years. Cars with a family reputation, high safety ratings, or from a reliable brand tend to do the best. Because a car starts losing part of its value as soon as its driven off the lot, buying slightly used can work in your favour as well and give you more for your money.

True Cost Calculations

To determine the true cost of a car, you’ll need to take all of these various factors into consideration. Depreciation, taxes, fees, insurance premiums, repairs, maintenance, and interest on your car loan should all be factored into the final cost. Fortunately, there are numerous calculators which can help you work out these figures, such as those provided by Edmund, What Car, or Car Plus. These calculate the overall running costs over a five-year period of time, which can help narrow down your final selection of cars to find the most economical fit.