• Wed. Sep 21st, 2022

The “true” cost of buying a car

ByElla E. Kidwell

May 11, 2022

On this episode of Deal with the moneywe are going to talk about the real price and the real cost of buying a car.

What’s up, everyone? It’s your boy, Brandon Copeland aka Professor Cope, and you’re now tuned in to another special episode of Deal with the money.

We’ve all heard that buying a car is a game and we need to learn how to play it. There are all kinds of things they tell you to do once you get to the dealership. But the truth is, after you make that handshake deal and agree on a price, it’s still not the full price you’re going to pay.

So today we’re talking about all those extra costs and breaking down the real cost of buying a car.

The true cost of buying a car

Check the duration of your loan

First of all, let’s check the duration of your loan. Whether you buy or lease, you’ll usually pay for the price of your car in a series of monthly payments over a set period of time.

These may seem to add up to the agreed price, but there are actually additional charges depending on your down payment and the length of your loan. Longer terms mean smaller monthly payments, but also mean you’ll pay significantly more interest over the life of the loan. Plus, if you’re buying a used vehicle or planning to upgrade your vehicle in just a few years, a long-term loan could even outlast your car.

Try to stick to a five-year loan for buying a new car and a three-year loan for buying a used car. Always check the terms and find a payment option that works for you. But in most cases, it’s better to pay it back sooner.

Remember your location

Remember your location. In addition to your monthly car payment, you’ll also pay sales tax up front, which will vary depending on the state you’re buying in. You can expect between 2% and 8%, so make sure you’re researching your state’s tax rate. If the price is right, you may even consider buying out of state.

On top of that, don’t forget about your state’s registration fees. These are usually at a fixed rate and will be the same no matter what car you drive. But be sure to double-check your location and factor that into the final cost.

Consider your insurance premiums

The next thing we need to consider are our insurance premiums. This is a big deal because insurance costs are quite a large part of the total purchase price of a car and depend on a wide variety of factors.

The cost of your premium depends on your age, where and how long you are traveling, your deductibles, your accident history, and the make, model and price of your car. This expensive red sports car may look better than the beat-up station wagon, but it will also cost a lot more to insure.

Once you know the car you’re considering buying, consider getting estimates from three or four different insurers. This will give you a better idea of ​​the real cost of buying your car and help you choose an insurance provider that meets your needs.

Make sure you get all the discounts you are entitled to. Discounts for safety features are automatically applied to your fare, but discounts related to a student driver or safe driving habits may not be, so be sure to ask before locking in a fare with a new one. insurance provider.

Consider fuel economy

Next, let’s talk about fuel economy, especially in a macro environment like today’s.

Is your car gas guzzling or making those miles count? Try to find a good balance between the characteristics of your car and the time you can go without refilling the tank. And remember, if you’re commuting or have a road trip coming up, you’ll start to feel the effects of your mileage almost immediately.

You can also consider a hybrid or electric car. These may cost more upfront, but could probably save some money on long-term operating costs. You may even receive a tax credit for driving an electric car, so do your research before entering the dealership.

Consider the cost of maintenance

And finally, we need to factor maintenance costs into the overall purchase price of our vehicle.

It is not only the cost of buying our car, but also the cost of clean this. If you’re buying your car, remember that used cars may be cheaper upfront, but may require more maintenance in return. while new cars will cost you more but should run longer without needing to be serviced.

When you rent a car, find out how much is covered by your warranty and how much comes out of your pocket. Additionally, you should check the manufacturer’s maintenance requirements, which may limit how your car can be serviced or where you can actually have the maintenance performed.

If you’re worried about regular maintenance costs, consider purchasing an extended warranty. Just be careful that the car doesn’t expire before the end of the warranty.

Cope’s Final Thoughts

Buying a car is one of the most unique purchases you will make many times in your life. There are so many factors that contribute to the final price of your car, which can change very slightly or quite significantly.

As always, remember to assess your own situation. Find a car that fits your lifestyle and plan ahead to make sure you account for the full cost of buying a car.

As always, stay safe, stay blessed. I’ll see you next time Deal with the money. Peace.

Links and resources mentioned