Why Car Ownership Costs So Much

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - December 27, 2017

Becoming a car owner is a big responsibility that requires more money than the initial cost of purchasing a vehicle.

Initial Budgets Are Important

A car buying budget should include the monthly payment and a down payment. Lenders are more likely to approve buyers that make a large down payment, because it's an indication they're invested in their purchase. Depending on the borrower’s credit situation, a down payment between 10 and 20 percent of the vehicle’s price is usually ideal.

It’s also good to remember that a shorter loan term will save money in interest charges. Credit scores dictate interest rates – lower credit typically means higher interest rates. A budget should take this into account.

Estimating Long-Term Costs

There are many tools available online to help buyers estimate auto financing costs. They calculate things like monthly payments, debt and payment to income ratios, down payments, and insurance.

The cost of car ownership should be a factor when selecting a vehicle for both the buyer’s needs and budget. Ownership costs include:

  • Tax, Title and License Fees – These vary by state, and, in some cases, the cost can be rolled into a loan, but it’s a good idea to pay them upfront to avoid additional interest charges.
  • Auto Insurance – Insurance costs vary based on many factors, including age and type of vehicle. Remember, financing requires full coverage.
  • Fuel – Take daily driving into consideration. Planning for a vehicle with better gas mileage may save enough at the pump to increase monthly payments or shorten the loan term.
  • Maintenance – All vehicles require regularly scheduled maintenance to keep them on the road. A maintenance budget should always include scheduled services and unexpected emergency costs. While a newer vehicle may cost more, it could save money if it requires less upkeep. Also, it’s often in a buyer's best interest to make sure any warranty lasts through the loan term – this may mean purchasing extended coverage.

Getting Started

Whether you’re beginning the search for your next vehicle, or you’re trying to find a dealership that can work with your unique credit situation, CarsDirect wants to help. Let us be the go-to source for all your vehicle research needs.

When you’re ready to take the next step, you can begin with our no-obligation, free, online auto loan request form. CarsDirect works with a nationwide network of special finance car dealers that have the lending resources available to assist people in many types of challenging credit situations. Get started today!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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