Are you thinking about getting a new car? Depending on where you live, the cost of owning a car will vary significantly. Even though you may have a very good credit history, the cost of financing in some states will vary, increasing the cost of owning a car in some cases by almost $6000 over a period of five years. The other factors that increase the cost of owning a car would be insurance, depending on where you live, taxes and fees, fuel and gas prices, car maintenance and rate of depreciation.
All the factors mentioned above vary from state to state and very quickly that $28,000 car you are eying would become much more than that, changing the cost of owning a car.
Cost of Owning a Car
1. Depreciation: With depreciation, people tend to not consider it as real money. According to Philip Reed, Edmunds.com’s senior consumer advice editor ” They don’t realize that’s money coming out of their pockets”
For example, the average depreciation of a car in California is $18,124. So if you bought a $30,000 car, after five years, it is only worth $11,876. While this could vary based on your Car make and model, depreciation is something you need to think about if you are trying to sell your car.
Of the total cost of owning a car, depreciation contributes to #1 share of cost, with the most loss coming in the first two years of you owning your car. Remember, after you bought that shiny new car and step out of the dealership with less than .1 miles on the car, you lowered the cost of your car by an average of $2000.
2. Auto Insurance: Auto Insurance is compulsory in all the 50 states. However the money you may be paying for Auto Insurance would vary by where you live. You will pay more in places like New York or LA where there is a higher concentration of cars which can in turn lead to more accidents or car theft. If you live in a place where there are a number of natural disasters like say on the fault line in California or regions exposed to wild fires like Texas and San Diego area, your Auto Insurance will tend to go up, increasing the cost of owning a car. Insurance costs, vary the most across the different states, as measured by Edmunds.
3. Sales Tax : There could a swing of almost 10% tax variation between the highest and lowest sales tax states. This is important considering the cost of owning a car. On a $30,000 car, a tax increase or decrease of 10% or $3000 is pretty important to keep in mind. Some states have sales tax as high as 8.5 – 9.0% whereas other states such as New Hampshire do not have a Sales tax, decreasing the cost of owning a car.
4. Gas Prices: Gas prices will vary from state to state because of the various state rules. States such as California have a high requirement for reformulated gas. So Gas companies will increase Gas prices where they pass some of these expenses onto their consumers. Other states with high EPA quality guidelines will also have higher gas prices.