Unless you own a boat, there is a chance that your car is the biggest ticket you own after your house. It is a huge expense that most people cannot avoid, because unless you live in a handful of big cities with good public transport or ridesharing services, you need your own car to get around.
Most Americans fund a car because few have cash available to pay for such a large purchase. That payment – which usually contains quite a lot of interest – is only part of what is spent on car ownership every month.
In most cases, people also have insurance (a few states do not require it), maintenance costs, gas, and perhaps a parking fee, depending on where you live. The numbers tend to hike quite quickly, but many people do not really consider full price when buying a car.
What does average American cost?
The average American spends $ 653 a month for car payments and car-related expenses, according to a survey of 2000 US adults made for The Zebra, an insurance comparison tool. It's a pretty hefty $ 7,836 a year to own a car and keep it on the road.
To put this into perspective, average Americans make $ 46,800 annually, according to data from the Bureau of Labor Statistics. This means that car expenses account for 1
Of course, it is possible to spend much less. It's actually probably smarter for most Americans to spend well under this number, but it requires smart decisions.
How to store a car
When buying a car, it is important to balance affordability and reliability. Buying a new car is almost never a good value, because the cars drop by 20% the other you drive them a lot. Imagine buying a stock that loses 20% in value guaranteed when you buy it, with a close guarantee it will be worth less as time goes on.
You want to be on the right side of the depreciation and generally it means buying a year old car or maybe a little older. It's usually the sweet spot to get something in good condition, where someone else has taken the depreciation.
Before you buy a car, you should also do your homework. Some vehicles have lower average repair needs and / or costs. Others cost more for even a simple oil change.
Use resources like Consumer Reports & # 39; Annual Used Car Purchase Guide to see the overview of the vehicle you plan to purchase. Cars can be difficult, as traditionally reliable models can have occasional bad years. You will also find in gas mileage, since cars in the same class can vary greatly.
And when it comes to getting loans, not all loan sources are created equal. If you have good credit, you will generally get better rates but get deals before going to the dealer. Credit unions often offer a better deal than traditional financing options, and you are not required to use the dealer's funding (although some dealers may act as you are).
Consider a car a necessary expense, but do what you can to keep those costs in check. It is possible if you are willing to drive the best car for what you need instead of the coolest or latest vehicle you can only afford.