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4 Costs of Car Ownership and How to Budget for Them

Your car is one of the biggest purchases you’ll ever make. But once you have it, the costs pile up. Keeping a car on the road is a costly business, and occasional “surprise” expenses can play havoc with your budget.

In this post, we’ll look at the costs of keeping a car on the road and strategies you can employ to keep the manageable.

1. Repairs

Let’s begin with repairs since they can be the expenses that hit you hardest when you least expect them. Buying a new car means you get a warranty, and for its duration, there’s a bit less to worry about. If you are very reliant on your car, you might decide to go for an extended warranty, but be aware that the automakers’ warranty might not be the best deal. As an example, look at the Honda extended warranty. Private companies might be able to offer you a better deal, but do be sure to check for exclusions before deciding on a package.

For those who don’t drive long distances, those who plan to trade in before the initial warranty expires, and those who have a backup plan should their car fall prey to mechanical failure, it may make more sense to skip getting an extended warranty altogether.

2. Fuel

Fuel costs are an inevitable cost of car ownership even if you choose an electric car. However, it is cheaper to get an electric car charged than it is to fill up the gas tank. No matter how your vehicle is powered, keep a logbook to track its energy use. A car that needs refueling or recharging more often than it should be developing a fault that can prove costly if not repaired.

Your logbook also allows you to determine the average distance you drive every month. You can use this figure in conjunction with the makers’ fuel consumption specifications to calculate how much you need to budget to power your car.

3. Insurance and Depreciation

Buying the most expensive car you can afford will have additional costs because it is more expensive to insure. Remember to factor this monthly cost in when considering the cost of buying and running your car. As time goes on, your car’s value depreciates, but your insurance premiums will likely remain the same. Few insurers are willing to make an adjustment to your premiums, so shop around and see if you can get a better deal or less comprehensive cover. However, don’t make the mistake of driving without any insurance.

Depreciation is a “cost” on its own. From the moment your car rolls off the dealership floor, it begins to lose value. It’s unavoidable. Keeping your mileage low helps you to retain value for longer, but one buys cars because of the need to travel, so it’s not easy trying to save in this way.

4. Various Car Registration and Licensing Costs

The authorities will also want a piece of the pie when it comes to your spending on car ownership. What these costs may depend on where in the world you live, and the regulations pertinent in that jurisdiction. Be sure to diarise renewal dates since traffic fines or liability issues can be a consequence of not paying attention to the red tape.

Use a Calculator

The costs of owning a car vary depending on a wide range of factors. Find an online calculator that takes your location into account to get a near estimate of the costs you’re looking at. With a little forward planning, you’ll be able to budget better and spend more time just relaxing and enjoying your ride.

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FinanceGABhttps://www.financegab.com/
Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.

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