Owning a car isn’t cheap - especially if you consider long-term maintenance, gas, taxes, fees and car insurance. Plus, there’s the fact that you may have financed your car and you’re paying interest on it. Finally, you have depreciation costs to consider. Add it all up, and it’s clear the expense associated with car ownership is no small matter.
But it’s possible to buy a new car with relatively low long-term costs. When deciding which car to buy, it helps to know which new cars are likely to cost less over the course of five years. This way, you can do a true evaluation of what it costs to own your car, and whether you’re in danger of the associated expenses turning a modest purchase into something unaffordable.
8 cars that come with relatively low costs
Edmunds Inc., a respected consumer site that reviews cars, has a tool called True Cost to Own that allows you to see the true cost to own a car. You can use this tool to help you find out how much a car will cost over the course of five years, with the following assumptions:
• The car is driven about 15,000 miles per year.
• The loan is for 60 months, and you have good credit.
• Average insurance costs for the car are based on demographics.
Edmunds includes depreciation costs and you may be surprised just how much that comes to. We’ve selected a list of eight cars you can buy for less than $25,000 – but that will cost you more over the course of five years. Even with the added costs, though, these cars won’t break the bank. It’s not as though you are buying a BMW that starts at nearly $56,000 and costs more than $76,000 to own over the course of five years.
1. Honda Insight: For those looking to keep their additional costs down, the Honda Insight might not be a bad choice. It does have a new car depreciation of more than $11,000, but you can save in terms of fuel costs and even for insurance in some cases. The purchase price is around $24,167, and the total five-year cost is $35,281. This means that, on top of the purchase price, you will likely pay $11,114 to own the Insight. That’s not too shabby over the course of five years.
2. Smart ForTwo: If you’re interested in a small car that’ll provide you savings on gas, the Smart ForTwo can be a good choice. With a cost to buy of $20,391 and a total five-year cost of $35,129, you’ll find you’re only paying an additional $14,738 in additional expenses. However, the depreciation of nearly $11,500 might be hard to take.
3. Honda Fit: Honda cars are known for their reliability and fuel efficiency. This can provide solid savings if you own your car for five years or more. The total true cost to own a Honda Fit, according to Edmunds, is $36,470, with $10,348 of that accounted for with depreciation. With an original cost of $21,183, that means that you’ll be paying an extra $15,287 to own the Fit.
4. Honda Accord: The new version of this car just barely makes it in under $25,000 at $24,500. But it’s true cost to own is actually around $40,503. It’s a bit more expensive to own over five years, due to higher fuel costs, as well as fairly high insurance rates. You’ll end up paying $16,003 on top of the purchase price to own an Accord for five years.
5. Mazda 5: This zippy and practical van from Mazda can be a good deal if you feel you need the extra space. You’re likely to pay about $23,589 originally; by the time you add in depreciation, maintenance, fuel costs and insurance (among other items), you are looking at a cost of around $41,203 over five years. This means an addition of $17,614 on top of the purchase price.
6. Jeep Patriot: If a SUV is what you seek, the Jeep Patriot is not a bad choice for the money. You can get one new for around $21,061. However, you’ll pay more in fuel costs, and even a little more than some of the other cars on this list for repairs. Your total cost to own a Patriot over five years will be in the neighborhood of $39,314; an addition of $18,253 to the purchase price.
7. Chevy Aveo: To buy this car new, you’ll pay about $16,270, with depreciation around $9,000. By the time you pay for gas, repairs, financing, taxes and insurance, you’ll be out $34,761 after five years, or almost $18,500 on top of the purchase price.
8. Ford Ranger: A truck can be handy, but its on-going costs can really add up. At $23,655, the Ford Ranger is relatively inexpensive to buy. However, fuel costs for the truck are quite high, and over five years car insurance costs amount to more than $10,000. This, along with other factors like a high rate of depreciation, brings the true cost of Ford Ranger ownership to $44,024, meaning you pay an extra $20,369 over five years.
As you can see, if you plan to keep a car for longer than five years, you can use the true cost of ownership tool to determine your likely per-year cost. You might find that paying a little more for a car with better gas mileage and lower car insurance is worth it over the long term.
