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Average annual cost of a car


Here is your guide on how to calculate average annual cost of a car and some tasty tips to save the annual cost of a car. The average saved amount is surprisingly huge. The cost of owning cars is depends on what kind of cars you own whether it is exotic cars, high performance cars, family cars, SUV, or normal sedan car. It also depends on where you live, where you work, how you use the car, and how do you maintain the car.

According to some statistic, one third of most peoples’ salary in Asia country has gone to car loan every month. Any car loan can be approved in these countries if the monthly car payment (see also calculate a monthly car payment) is one third of the monthly income. In U.S, the cost to own a car is the second largest household expenses. Therefore it is important to know how to determine the average annual cost to own a car and manage the car ownership cost properly.

Tips to save cost

Here are the top 5 ways where you can have a huge saving on annual cost to own a car. These also the factors that affect the cost to own a car, always remember “A penny saved is a penny earned”.

Car insurance. Buy a car with more safety features like ABS brakes, theft-system, alarm system, air bags, and any other extra safety features in the car will lead you to cheaper car insurance. For young teenager driver, you can get cheaper insurance with good student grade, safety driving course certificate, or buy the car insurance under parent’s insurance policy. See also average cost of car insurance for a teenager.

Car maintenance. It is important to choose a right car to drive in the right town. Be smart, buy a car that has the assembly plant in your country is always cheaper than buying an import car. The maintenance for local assemble car is often cheaper than imports. For more detail cost, see our car maintenance category.

Car loan. Car loan play an important role in determining the average cost of a car. High APR or interest rate will lead to high cost to own a car. Hence, choose the car loan properly before you sign any contract.

Depreciation. Average annual cost is pretty much depends on the depreciation. Choose a good used car is smart choice, keep your older car is wise decision, buy a good looking reliable car is smart! In a nutshell, buy car with lower depreciation! You may want to see cars that appreciates over the time.

Gasoline. Choose a low fuel consumption car, hybrid car, or electric cars (If it is allow to use in your country).

Calculating average annual cost

In a nutshell, here is the formula to calculate cost to own a car.
Annual cost to purchase a car + annual financial charges (loan interest) + annual cost for gasoline + annual insurance cost + annual maintenance and repair cost = average cost to own a car.

There is visible and invisible cost to own a car. For example car park cost. Someone who takes public transport to work may not need to rent a car park at the office building, but someone who owns a car will definitely need to pay a monthly fee for car park at the place where he works. Other than that, invisible cost can be the car road tax, license fee, and other fees.
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