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Consider The TOTAL
Cost Of Buying A New Car
By
MySpendingPlan.com Editorial Staff
When buying new
car, many people make the mistake of simply choosing a car that has the
lower purchase price. After all, if you like two cars equally and one
is cheaper than the other, then it always makes sense to buy the cheaper
car, right? Well, not always.
When determining
how much a car is going to cost you, you have to consider the total cost
of car ownership and not just the initial cost of buying the car. The
cost of buying new car and that of owning it are entirely different
altogether. Below is a look at what the total cost of car ownership
includes.
Real Cost of
Car Ownership:
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Sticker
price: This is the
basic cost of the new car. You can either pay the entire amount up
front, or take a car loan to finance your purchase. If you do take
a loan, you will have to bear interest on the loan amount too.
-
Insurance
costs: All car owners
are required to have some minimum car insurance. This cost is not
included in the original price of the car and has to be paid
separately. Auto insurance policies have to be renewed every year,
but the insurance costs can become lower as the value of the car
depreciates.
-
Fuel
costs: With gas prices
skyrocketing, this is a big thing to consider. For instance, if a
particular car gives you a mileage of 25 miles per gallon as opposed
to one that gives a mileage of 15 miles per gallon, the car which
has the better gas mileage will be cheaper to run even if it is more
expensive to buy.
-
Maintenance and repair costs:
These vary from car to car and depend on how good a condition you
keep your car in. The kind of roads you drive your car on will also
affect its maintenance. These costs are typically low when the car
is new and keep increasing as the car gets older. Do your homework
on what kind of reliability ratings a particular car is receiving.
-
Registration costs:
This is a one time expense that has to be borne when you first
register yourself as the owner of the new car.
-
Taxes and
fees: Applicable taxes
and fees such as sales tax, dealer’s fee, etc. also add to the cost
of a new car.
Don’t Forget
Possible Tax Deductions for Car Owners
There are
certain tax deductions available to car owners, especially if your car
is used for business purposes too. All tax breaks that you are eligible
for should be factored in so as to reach the true total cost of auto
ownership.
Control Those
Finance Charges
Finance/interest
charges can form a considerable part of your monthly car payment. The
rate of interest that you pay is directly dependent on your credit
score. The higher your credit score, the lower your interest rate and
consequently the finance charges. To ensure that you get the best
rate possible, order your FICO score and try to improve it.
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