Car Ownership And The Real Costs of Driving

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Car Ownership - How to Minimize the Cost of Owning a Car
Where would we be without our vehicles? If you don’t live in a city where public transportation and rideshare services abound, car ownership is a staple of everyday life. And if you own a car or you’re looking to purchase one, you know that car ownership can get expensive. Between fuel costs, everyday maintenance, repairs,…

Where would we be without our vehicles?

If you don’t live in a city where public transportation and rideshare services abound, car ownership is a staple of everyday life.

And if you own a car or you’re looking to purchase one, you know that car ownership can get expensive.

Between fuel costs, everyday maintenance, repairs, insurance, buying, and selling, there are a lot of financial factors to budget into your plans.

In this guide, we’ll take a look at the true costs of owning a car and what strategies you can employ to save money on your vehicle.

Regular Costs of Owning a Car

Couple is happy about saving money with their car purchase

Car ownership is more than just buying a car. You have to consider maintenance, fuel, insurance, depreciation, taxes and registration, and in some places, parking.

You can plan for many of these expenses before buying your car. For example, you can shop for a less expensive vehicle, or buy a used car that has already taken a big depreciation hit. Some cars cost much less to insure than others. And of course, you can always shop for a more fuel-efficient vehicle.

However, there are some expenses you cannot plan for.

Many car owners are left shocked and scrambling to foot the bill when unexpected expenses hit. Below are a few places to save money on, and for, your car.

Ongoing Car Ownership Expenses

We will limit this section to those expenses most car owners are already familiar with. This includes expenses such as gas, taxes and registration, and scheduled maintenance, such as fuel, brakes, and new tires.

Some of these expenses are fixed, and some are variable. For example, you will likely have to pay a registration fee each year. This is generally non-negotiable, and a fixed rate, regardless of your vehicle. However, some states also assess a personal property tax based on the value of your vehicle. In some states, this annual tax can be up to 2% of your vehicle’s value.

Fuel expenses are variable, based on your vehicle’s gas mileage, the number of miles you drive, and your driving habits. If you find yourself driving a lot of miles, then you might consider using a gas rewards credit card to earn up to 5% cash back on your gas expenses.

Finally, all cars require scheduled maintenance. Taking care of your car will improve your vehicle’s safety, reliability, and longevity. It will also help you maintain its value which is important when you go to sell the car or trade it for a new vehicle purchase.


Whether it’s scheduled maintenance, like an oil change, or an unexpected problem such as a flat tire or a broken transmission, repairs are an inevitable part of owning a car. Depending on the car your drive and the extent of the issue, repairs can get expensive quickly.

Keep the following in mind to minimize the cost of repairing your car:

  • Weigh the cost: You first need to consider whether you should repair or replace your car. If your car is old, riddled with issues, or the repair costs are more than the car itself is worth, you might be better off purchasing a new vehicle altogether.
  • Use the service schedule: If your manufacturer recommends you get your oil changed at a certain frequency, do it! Get your check engine light diagnosed as soon as it comes on. You should also track the maintenance you have done on your car.
  • Shop national: When it comes to buying tires, batteries, and other products with warranties, go with a chain that will cover you no matter where you are, so you aren’t left in a bind if you need a repair while traveling.
  • Shop local: If you need standard repair work, local shops can provide quality service, experienced advice, and fair prices. You can also establish trust with local businesses and pour back into the local community.
  • Consider an extended warranty: Standard manufacturer warranties expire when your car hits a certain mileage or age, and its coverage may be limited. An extended warranty can lengthen the time and coverage offered by the warranty.

With the info above in mind, you can budget for the unexpected and work to maintain the value of your car, which can have far-reaching impacts on your finances, allowing you to get the most out of your car both now and when you’re ready to sell it.

Car Insurance

All car owners need auto insurance, period. In fact, you’re required to have some form of a car insurance policy in force in nearly every state. Beyond the required liability insurance that pays for reparations in an accident you caused, you might want to opt for collision and comprehensive coverage, which pay for damage to your own vehicle.

You can also purchase personal injury insurance and uninsured motorist coverage, which could be worthwhile depending on your budget and needs. In addition to protecting you when you’re on the road, your car insurance will pay for repairs if someone borrows your car and causes an accident.

Here are a few factors which will impact your car insurance rates:

  • Driving record: Your auto insurance rates will be most heavily impacted by your driving record, which means you need to avoid speeding tickets, texting behind the wheel, and drinking and driving. Likewise, your claims history with previous policies will come into play.
  • Age: Auto insurers are all about assessing risk, meaning young adults and parents of teens are more susceptible to high rates. Consider this added cost when you buy a new car for your teenager.
  • Vehicle: The insurance company will look at the type of car you drive, how often you drive it, and where you keep your car parked to help determine the risk they run in insuring it.
  • Insurance score: Believe it or not, your insurance score factors into assessing how responsible you are in your decision-making.
  • Deductible: Before the auto insurance policy kicks in, the policyholder is required to pay a percentage of the cost of repair. The higher the deductible, the lower your monthly premiums will be.

Taking the time to shop for insurance quotes and reviewing each insurance provider’s financial standing can help ensure you get the best policy for your needs.

Tips for Buying a Car

A lot of the advice in this section can apply to buying a car as well as selling one. Here are a few more tips for car buying, from budgeting for a car to picking the best one for your needs.

With a sound strategy in place, you can save money for a car you’ll love and drive off into the sunset with minimal hassle.

Know What You Want

The first step to buying the car of your dreams is knowing what you want. What is the main purpose of the vehicle? Do you need a gas-sipping commuter, or do you need a family-hauling SUV? Perhaps you need a work truck for hauling large or heavy items.

Once you narrow down the vehicle type, you can further refine your search to the make and model of the vehicle, the age (new or used), safety and convenience features, and other factors.

The answers to these questions will determine how and where you search for your next vehicle.

Maybe you want to buy a classic Corvette. If so, your car buying experience might look different than if you’re buying a minivan from the local dealership to haul your kids in.

Finding affordable classic cars, or fuel-efficient SUVs, or technologically advanced safety features will require you to dig a little deeper.

Consider New and Old Cars

Your budget will play a large part in deciding whether or not you can afford to look at new cars. Even if you do have the means to purchase a new car, you may want to consider used ones as well.

Does that mean you need to go out and buy a 10-year-old car that lacks the features you want when you can afford a nicer vehicle? Certainly not. However, there are advantages to buying a beater car, especially if is a second car or if it is for a younger driver.

New Vs. Used:

There are advantages to buying a new car. These include the full manufacturer’s warranty, you know the entire service history, and you get the latest safety and technology features.

Many people will say you should never buy new, but that is not always the case. Buying a new car can be beneficial if you know you can afford the vehicle (and not just the monthly payments) and you know you will keep the vehicle for a long time.

That said, buying used can be a better financial move since they generally cost much less than new vehicles. Since cars depreciate, some more quickly than others, you may be able to save a significant amount of money by buying a mint-condition car that’s just a year or two old.

Purchasing a used car does come with risks, but if you make sure to buy from a reputable source, check the vehicle’s Carfax report, take it for a test ride, and drop by a mechanic, you should be good to go. Just be sure to look for signs the vehicle has been in a flood or accident. You do not want to buy a vehicle with that kind of history.

Do Your Research

In addition to researching the features that a car has to offer, you also need to assess a few financial factors before you buy. A tool like Kelly Blue Book can help you establish the price of your vehicle.

Carfax is another excellent tool for car buyers, one that can give you the full history of a used vehicle to help you make an informed decision.

If you’re buying a used car, you need to look at the resale value of the car you’re looking at. If you’re buying a new car, look for its invoice price. You will also want to compare new prices between dealerships, or by using a third-party tool such as TrueCar or

These tools help you compare new and used car prices to ensure you are getting competitive offers.

Additionally, you need to pay close attention to the car’s purchase price rather than just looking at the payments. While companies may promote low monthly payments, they may be stretched over a long time and amount to a higher purchase price than the car is worth.

These long-duration loans can be problematic and cause car buyers to be underwater on their loans for a long time. Be sure to look at GAP Insurance if you are financing your car, as it can help protect you if your car is totaled and you owe more than it is worth.

Lastly, you need to research how a car will impact your auto insurance. If you’re buying a sports car, you can expect to pay higher premiums on auto insurance. And if you purchase a car that has a historically higher probability of getting stolen, your premiums can be impacted as well.

Get Your Financing In Order

The best car is a paid-off car. Paying cash for a car is generally the best option. These tips can help you save for a car you’ll love so you can avoid taking out a loan on your next vehicle.

However, if you are unable to pay for a car outright, then you might need to consider taking out an auto loan. If that is the case, you need to get your financing in order. It’s best to do this before you start shopping for a new car. You can typically find a better interest rate on an auto loan at your bank or credit union than at a car dealership.

To get the best rates, we recommend using a tool like LendingTree, where you can get connected to top lenders in one place, with quick quotes on loans you qualify for.

In order to get the lowest rates on an auto loan, you need to have a good credit score. You can use a free service like Credit Karma to check your credit score regularly and find insights to help you boost your score and maintain good credit.

It’s still possible to buy a car with bad credit. But you should expect to pay higher interest rates and have less room when negotiating the price. If possible, try to first improve your credit score before purchasing your next car. A higher credit score equals lower interest rates and more money in your pocket.

Shop Around for the Best Deals

It may be tempting to only look at one dealership when they have the car you want, but it’s wise to shop around and also to be flexible with negotiations.

You will get the best price on a new car if you compare prices with several dealerships.

If you are buying a used car, look to local dealerships, used car lots, Craigslist, the Facebook Marketplace, Carmax, and your neighbor’s yard with a for sale sign in the car’s window.

You can even buy used cars from car rental companies. This can actually be a good deal, as car rental companies take good care of their vehicles and ensure all scheduled maintenance is done on time.

If your local searches aren’t turning up any results, you might want to consider expanding your search to neighboring cities or states. The money you spend on gas to travel a couple of hours away could be well worth it if it leads to you driving away in a new well-priced vehicle.

While you’re out car shopping, it’s always a smart idea to opt for a test drive. And if you’re buying a used car, you should drop by a mechanic to make sure everything is in good shape before signing the dotted line.

Tips for Selling Your Car

Whether your family has grown beyond the limits of your two-door sports car or you got a raise and it’s time to upgrade your ride, there are a number of ways you can go about selling your car.

Whether you’re wondering how to sell your car yourself or with a dealer, here are a few tips:

  1. Trade In: While you may not get as much money out of trading in your vehicle, you’ll get a quick, hassle-free experience and may save on sales tax. If you do trade, be sure your negotiations include both the price of the new vehicle and your trade-in. Otherwise, that awesome price the dealership quotes you on a new car may come with a ridiculously low offer on your current car.
  2. Know your car’s worth: Platforms like Kelly Blue Book and are great resources that provide you with accurate appraisals to help you price your car.
  3. Consider Carmax: Carmax can help with the step above, assessing the value of your car. They can also take it off your hands, selling it at one of their national locations. Carmax will sell the car for a profit of course, but they remove the burden from your shoulders and you still get a reasonable price.
  4. Keep up appearances: Don’t drive to the lot or post pictures on Craigslist with a dirty, dinged-up car. To get the most out of your sale, spend a little time and money getting your car detailed, taking care of maintenance issues, and touching up dents and scratches. Making your car look as new as possible could make you hundreds, maybe even a couple thousand, dollars more.
  5. Use your words: Marketing matters when it comes to selling your car. Be honest about its issues, and be sure to include crucial details like the make, model, year, price, and mileage. Beyond those details, promote all the great things your car has to offer to a prospective buyer.
  6. Post quality photos: Featuring images adds a lot of value to a car listing and is far more likely to elicit responses from buyers. Take high-resolution images from every angle.
  7. Be prepared to negotiate: If you’re looking to sell your car on Craigslist, you can count on offers below your selling point. Make it clear in your post whether you’re open to negotiating or not. You could also make your asking price a bit higher than the price you actually want with a willingness to drop the price in negotiations. Be respectful and flexible.

Bottom Line

Whether you’re looking to sell your car and buy a new one or you’re planning to drive your current vehicle for years to come, there are steps you can take to ensure you get the maximum value out of your car.

There’s far more to owning a car than making a purchase. From everyday maintenance to repairs and insurance, keeping up your car takes time, care, and cash.

With car ownership built into your budget, you can rest easy knowing you’ll be covered if you need to repair or replace your car.

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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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