Eighty-eight percent of American households own a car, and the average household has 2.28 vehicles and four percent of people who set a savings goal with Charlie are saving for a car.

But before you rush down to the dealership, it’s important to consider a major factor — the total cost. On top of the price you pay to buy your ride, owners spend an average of $8,100 a year. Far from the average of $3,603 Charlie users are aiming to set aside! 

You might be asking yourself, “Why are cars so expensive?” Let’s consider three key factors that will help you determine if you’re ready to buy a car. 

Dude, Where’s My Car? 

Where will your car be living and driving? Whether you live in an urban, suburban, or rural area, your needs for wheels can differ dramatically. If you live in a rural area, driving longer distances may impact the mileage and type of car (four-wheel drive, all terrain, etc.) that is best for you. In a highly urban areas, you may not need to drive as often or as far, but traffic and parking are additional concerns. (City dwellers: Take a peek at your public transportation options. Might be the best route for your wallet too!) Climate and terrain should also come into consideration when estimating total costs of your new whip. Regions with heavy snow, muddy roads, record high heat, and other extreme conditions can all take a toll on your car, and the kind of car required.   

Think Of It As “Vintage” 

You might be picturing yourself cruising along a windy coastal road in a brand-new, shiny car. But the reality is you might need to take a good hard look at your income and budget, to see whether a new car or a used car is the best move. When weighing the pros and cons of going new or used, consider car depreciation long term. Cars depreciate (or decrease in value) the second they find a new home (or are driven off the lot). A brand new car is 20% less valuable as soon as you drive it for the first time. This factor alone could be enough to steer you away from going to the new route. 

Also consider the time, effort, and vetting each requires. New cars can be easier to shop around for, and dealerships offer the safety net of warranties and other perks. Used cars may not offer the same warranties, and you’ll have to do extensive research to access the background and health of the car. Be sure to run a full consumer report to get a clear understanding of what issues the car may have had (or not had) in the past. Think about it like researching your Tinder matches on Facebook — you want to make sure they’re legit and that their backgrounds add up. While used car shopping can be a bit trickier when determining a good purchase, you may find better prices and lower insurance rates. 

The Gift That Keeps on Taking   

After driving out of the lot with your new car that’s that… right? Think again! Here are some of the costs that might make you smash the piggy bank down the line: 

Parking: If you commute regularly to work or other don’t have free parking near your home, you may have to face consistent parking fees. In urban areas this can be extreme. In 2017 drivers in New York City spent an average of $5,395 on parking for the year. Drivers in Chicago, San Francisco, and D.C. spent an average of $2,000-3,000, and drivers in Atlanta spent $872. 

Maintenance: According to AAA, the average car owner will shell out just over $1,000 to keep their car in good shape every year.

Fuel: Drivers should be prepared to spend at least $1,500 a year on gas. Fuel is a necessary evil — you can’t drive your car if it won’t start!

Other Fees: Don’t forget about yearly license and registration costs, oil changes, and smog checks!

Insurance: Car insurance is required in all states (except New Hampshire), but it can be far more expensive to risk paying for damages in an accident without it. And, it’s illegal! Standard insurance typically runs just over $100 a month. But depending on the type of car you purchase, where you live, and your previous driving record — your rate could fluctuate quite a bit. There are also tons of additional coverage options for injury, accidents with uninsured drivers, towing services, and more.

Determining whether or not you’re ready to buy your first car can be a big decision, but making sure you have the full picture on costs and how it may impact your budget will help you decide whether the time is right.

Source: HiCharlie Blog