Expecting the Expected Monthly Auto Expenses
Owning a car is awesome! A car says something about who we are when we pull up to the curb. It helps you get things done. It gives you freedom.
Here at the Ashland Community Credit Union, we finance many auto loans for our members, so we get to see the other side of owning a car…the expenses. It's important to remember that the price tag on the vehicle isn’t the only expense. Since we like to help our members make great decisions, we thought it might be nice to help you budget for all car expenses, not just the monthly payment.
The Purchase Price
The purchase price is the most obvious cost of owning a car, but people usually think about that in terms of the monthly payment. You might also consider depreciation. A new car may depreciate faster than a used car. Over the first five years, a new car can depreciate by up to 60%. Usually, the older a car gets, the less you pay, and the less it depreciates. This isn’t a monthly expense you’ll notice, but certainly factors into the long term expense you’re realize.
The Auto Loan
When determining how much you can afford, a good rule of thumb is to spend no more than 10-15% of your monthly take-home pay on your car payment. That’s just a range, and only you know what you can truly afford. We can help you make the right decision for you, regardless of how much you make per month, or if your credit score is low.
Pro Tip: The lower your interest rate, the lower your payment. Find the lowest qualifying rate you can, which isn’t always at your auto dealership. Ashland Community Credit Union members usually have access to the area’s lowest auto loan rates. Click here to learn more.
Insurance
This is a big one. Insurance is a major factor in car ownership costs. The price of car insurance depends on the make and model of the car, your driving history, and where you live. The average insurance payment can add take an extra hundred dollars or so from your monthly budget.
Gasoline or Charging Costs
Fueling your car—whether with gasoline or electricity—is an ongoing expense that can add up quickly. And it’s not just the daily price per gallon at the pump. Everyone is different, but you might expect to spend one to two hundred dollars a month or so on fuel. It’s a necessary expense if you want to get where you are going, but it helps to plan this into your monthly budget.
Maintenance and Repairs
New cars have warranties, but those usually don’t cover oil changes, tires, brakes, etc. These aren’t monthly expenses, but you should plan ahead. Set aside a maintenance fund for these expenses so that you aren’t surprised.
There are other expenses, of course. Registration, Taxes, and Fees are usually included in your downpayment or rolled into your car loan. But you do need to renew those license plates every year! Car washes, parking fees, etc. But now we’re in the weeds!
None of this information is meant to scare you away from car ownership. They are costs that come with the territory. It’s wise to know the extra expenses, so that you can plan them into your budget. When considering how much you can afford, be sure to factor in financing, insurance, maintenance, fuel, and more.
Making smart money decisions is something we like to help our members do here at the Ashland Community Credit Union. We’ll listen to what you’re trying to do, give you the information you need to know, and set you up for success in every way we can.
That’s because members here are part of the family.
Here at the Ashland Community Credit Union, we take care of family.
