Buying a car is a big deal. Most of us browse hundreds of listings, find the right model, take it for a test drive, crunch the numbers, and negotiate the price as part of the process. And if all goes well, we finally get to drive it off the lot. But the purchase is just the beginning. From maintenance and insurance to gas and taxes, owning a car comes with several costs that don’t show up on the sticker. Here are six expenses to think about before making a final decision.
1. Routine Maintenance & Repairs
Whether buying a new car or a used model, every vehicle needs regular upkeep. Oil changes, brake pads, tire rotations — these relatively minor expenses can seem to come out of nowhere if they haven’t been accounted for ahead of time. It’s also worth remembering that, even though they’re less expensive up front, older cars tend to need more frequent repairs.
Plan ahead: Add up the total annual cost of expected maintenance, divide the total by 12, and set aside that amount each month. To protect yourself against unexpected repairs, consider signing up for Mechanical Repair Coverage.
2. Auto Insurance
As a car owner, auto insurance is a must (AKA — required by law). Multiple factors determine auto insurance premiums: age, location, driving history, and even credit score. And typically, the nicer the car, the higher the premium. So, before signing the paperwork and getting the keys, be sure to know how much insuring your new (or new to you) car will cost each month. Then include that amount in your budget.
Look for the best deal: Compare quotes from multiple insurance providers, and check for discounts through your employer, credit union, or bundled policies.
3. Fuel (or Charging) Costs
Whether filling up at the pump or plugging in to recharge, these costs can add up. And while gas and power prices can go up and down, your lifestyle — work commute, frequency of road trips, or errands around town — will be the biggest factor to consider.
Know your mileage: Track how much you spend on gas or charging each week, then see how far that goes. Comparing the cost per mile can help you pick a car that saves money over time.
4. Taxes, Title, and Fees
Focusing only on a vehicle's sticker price means overlooking a big part of the total cost. Registration, taxes, and title fees vary by state, but it’s a smart move to plan for these upfront costs. While title fees are a one-time cost, registration fees and property taxes are annual costs that should be budgeted for.
Break up the total cost: Plan ahead by estimating these yearly costs and setting aside a little each month to stay ahead of renewals.
5. Depreciation
It may seem odd to think about a car's resale or trade value before buying it, but thinking ahead can save significant money in the long run. A new car starts losing value the minute it’s driven off the lot. This is called depreciation, and it impacts the long-term value of the vehicle, which can directly affect your wallet when it’s time to sell or trade it in.
Start with the end in mind: Look for vehicles with high resale ratings or explore certified pre-owned options.
6. Financing Costs
For many of us, buying a car is one of our biggest expenses — one that often requires financing. This means getting a loan to purchase the vehicle versus paying the full price out of pocket. When looking for a loan, it's important to pay attention to the interest rate. This is the "cost" the financial institution will charge for borrowing money from them. While the interest rate is not the only factor to consider, it is important, as it potentially can save thousands of dollars over the life of the loan.
Secure long-term savings with lower rates: Credit unions often offer lower interest rates and personalized guidance to help you choose the auto loan that fits your long-term financial plans.
Always Look Beyond the Sticker Price
Buying a car is exciting — but it’s easy to overlook the total cost. With a little planning, you can steer clear of surprise expenses and enjoy your new ride!
If you’re looking for help with financing your next vehicle, talk with a Spero advisor to find tools, resources, and programs that fit your financial goals.
This material is for educational purposes only and is not intended to provide specific advice or recommendations for any individual.
