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by Joel Fink
[/et_pb_text][et_pb_image src=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9mZWF0dXJlZF9pbWFnZSIsInNldHRpbmdzIjp7fX0=@” alt=”DIY Landscaping for Less photo” title_text=”DIY-landscaping-for-less” url_new_window=”on” align=”center” align_tablet=”center” align_phone=”” align_last_edited=”on|phone” admin_label=”Image” _builder_version=”4.27.5″ _dynamic_attributes=”src” width=”100%” max_width=”100%” height=”100%” animation_style=”zoom” always_center_on_mobile=”on” global_module=”1362″ saved_tabs=”all” global_colors_info=”{}”][/et_pb_image][et_pb_text quote_border_weight=”2px” quote_border_color=”#00704A” admin_label=”Article Description 2026″ _builder_version=”4.27.5″ text_font=”||on||||||” text_text_color=”#595959″ text_font_size=”20px” text_line_height=”1.3em” quote_font_size=”22px” quote_line_height=”1.8em” header_text_color=”#003366″ header_2_text_color=”#00704A” header_2_font_size=”32px” header_2_line_height=”1.3em” header_3_text_color=”#00704A” header_3_font_size=”25px” header_3_line_height=”1.4em” custom_margin=”-20px||” custom_padding=”||0px||false|false” text_font_last_edited=”off|desktop” header_text_color_tablet=”#003366″ header_text_color_phone=”#003366″ header_text_color_last_edited=”on|phone” header_font_size_tablet=”” header_font_size_phone=”36px” header_font_size_last_edited=”on|phone” header_line_height_tablet=”” header_line_height_phone=”” header_line_height_last_edited=”on|phone” header_2_text_color_tablet=”#00704A” header_2_text_color_phone=”#00704A” header_2_text_color_last_edited=”on|phone” header_2_font_size_tablet=”32px” header_2_font_size_phone=”30px” header_2_font_size_last_edited=”on|phone” global_module=”1364″ saved_tabs=”all” global_colors_info=”{%22gcid-e17b83ed-74fc-4d3a-a1e9-e893f996498c%22:%91%22header_text_color_phone%22,%22header_text_color_tablet%22,%22header_2_text_color%22%93}”]
Do you know how much your car actually costs you? Many owners underestimate the single biggest expense of car ownership. This article explains what matters and how to reduce those costs.
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Let’s talk cars.
What is the single most expensive part of owning a car?
Is it insurance, fuel, loan interest, or repairs and maintenance?
[/et_pb_text][et_pb_code admin_label=”Ad Sense Inline Top” _builder_version=”4.23.1″ text_orientation=”center” max_width_tablet=”” max_width_phone=”” max_width_last_edited=”on|phone” module_alignment=”center” custom_margin=”||||false|false” custom_padding=”||||false|false” global_module=”1200″ global_colors_info=”{}”][/et_pb_code][et_pb_text ol_position=”outside” ol_item_indent=”20px” quote_border_weight=”2px” quote_border_color=”#00704a” ul_position_tablet=”outside” ul_position_phone=”outside” ul_position_last_edited=”on|desktop” admin_label=”Article Text and Headers” _builder_version=”4.27.5″ text_font=”Pontano Sans||||||||” text_text_color=”#000000″ link_font=”||||on||||” link_text_color=”#782639″ ul_font=”||||||||” ul_font_size=”22px” ul_line_height=”1.8em” ol_font=”||||||||” ol_font_size=”22px” ol_line_height=”1.5em” quote_font_size=”22px” quote_line_height=”1.8em” header_font=”||||||||” header_text_color=”#246c21″ header_2_font=”||||||||” header_2_text_color=”#246c21″ header_2_font_size=”34px” header_2_line_height=”1.3em” header_3_font=”|700|||||||” header_3_text_color=”#246c21″ header_3_font_size=”26px” header_3_line_height=”1.4em” z_index=”0″ width=”100%” width_tablet=”” width_phone=”” width_last_edited=”on|desktop” max_width=”100%” height=”1″ custom_margin=”||||false|false” custom_padding=”||4px||false|false” hover_enabled=”0″ text_font_size_tablet=”” text_font_size_phone=”” text_font_size_last_edited=”on|tablet” header_text_color_tablet=”#003366″ header_text_color_phone=”#003366″ header_text_color_last_edited=”on|phone” header_font_size_tablet=”” header_font_size_phone=”36px” header_font_size_last_edited=”on|desktop” header_line_height_tablet=”” header_line_height_phone=”” header_line_height_last_edited=”on|desktop” header_2_font_size_tablet=”” header_2_font_size_phone=”32px” header_2_font_size_last_edited=”on|phone” header_3_font_size_tablet=”25px” header_3_font_size_phone=”25px” header_3_font_size_last_edited=”on|desktop” global_module=”1205″ saved_tabs=”all” global_colors_info=”{}” sticky_enabled=”0″]
The High Cost of Depreciation
Depreciation is the largest expense most owners face. It describes the reduction in a car’s value over time, and it begins the moment you drive a new car off the lot.
New vehicles typically lose a large portion of their value in the first years of ownership. For example, many industry sources note that a new car can lose roughly 20% of its value in the first year and about 40% after five years. That means a $30,000 car could be worth around $24,000 after a year — a $6,000 drop in value that represents a real cost to own the vehicle.
Depreciation is in addition to recurring expenses like fuel, insurance, parking, loan interest, and routine repairs and maintenance.
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1. Research total cost of ownership before you buy
Choose models known for good fuel economy, reliability and reasonable maintenance costs. Look for vehicles with strong resale values and favorable ownership ratings so depreciation has less impact on your long-term costs.
2. Check insurance costs in advance
Ask your insurer about rates for the specific models and years you’re considering. If quotes are high, get competing quotes or consult an independent agent to find better coverage at a lower price.
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3. Consider a gently used car
Since depreciation is steepest in the first few years, buying a car that is one or two years old often saves you money on the purchase price. Balance that against potentially higher maintenance and repair costs as a car ages, and weigh available warranties—used cars may still have remaining factory coverage or optional extended warranties.
4. Keep the car longer when practical
After the initial depreciation period, annual depreciation drops substantially. If you can keep a vehicle beyond the period when loan payments are required, you can significantly lower your average annual cost of ownership. Regular maintenance and careful driving can extend the useful life of the car and maximize value.
Cars are an expensive necessity for many households. Careful selection, comparing insurance and ownership costs, considering nearly-new used vehicles, and keeping cars longer when feasible all help reduce overall expense.
[/et_pb_text][et_pb_text admin_label=”Related Bulleted List” _builder_version=”4.27.5″ text_font=”||||||||” text_text_color=”#494949″ text_font_size=”24px” text_line_height=”1.4em” link_font=”|600|||||||” link_text_color=”#782639″ ul_font=”||||||||” ul_text_color=”#000000″ ul_font_size=”22px” ul_line_height=”1.2em” custom_margin=”||||false|false” text_font_size_tablet=”” text_font_size_phone=”” text_font_size_last_edited=”on|desktop” global_module=”2133″ saved_tabs=”all” global_colors_info=”{}”]Related:
- 4 Ways To Extend the Life of Your Car
- How To Never Have Another Car Payment
- Could You Be a One Car Family?
- Is Auto Repair Maintenance Insurance Worth the Cost?
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Reviewed July 2023
[/et_pb_text][et_pb_text admin_label=”Bio Joel Fink” _builder_version=”3.29.3″ text_font=”||||||||” text_text_color=”#000000″ text_font_size=”20px” text_line_height=”1.3em” header_font=”||||||||” header_4_font=”||||||||” header_4_text_color=”#00704a” header_4_font_size=”26px” custom_margin=”-10px||” global_module=”9753″ saved_tabs=”all” global_colors_info=”{}”]
About the Author
Joel Fink is a retired CPA and financial services executive based in Dallas, Texas. He writes practical personal-finance articles aimed at helping people manage money and improve everyday finances.
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