Owning a car is a rite of passage in the US, but that may change soon with the cost of ownership going higher and higher every day. Many drivers pay more to own and operate a car than they spend on health insurance or taxes. Next to a house, a car is the most expensive asset for many of us. The price of a vehicle can be expensive, but the operating cost will eclipse the purchase price in the long run so you need to consider the total cost of ownership when choosing a vehicle. Owning a vehicle entails many bills including:
- Car payment
- Car insurance
- Taxes and fees
The price of gasoline hit an all time high in the US earlier this year at $3.99 per gallon. While the price finally came down in November, it’s sure to go back up again next summer. It’s a good thing there were many more choices for a fuel-thrifty car in 2012. The higher fuel cost is a great incentive for drivers to move to a more environmentally friendly vehicle like a hybrid.
Lower total cost of ownership
Kelly Blue Book announced its inaugural Total Cost of Ownership Award winner earlier this year. Drivers can use this guide to make a more informed decision when buying a new or used vehicle. In KBB’s study, the total cost of ownership includes depreciation, expected fuel costs, finance and insurance fees, maintenance and repair costs, and state fees for new models. The winners are models with the lowest projected five-year total.
Hybrid Car Winner
The Honda Insight is the winner in the Hybrid Car category. The top three hybrid models are all Hondas. The Honda Insight, CR-Z, and Civic Hybrid are all at the top of the Hybrid Car category. I really like Hondas, but their purchase price is usually higher than other brands. However, Hondas are very reliable and fuel efficient. This pushes down the total cost of ownership and they are a great choice if you plan to drive the same vehicle for 5 or more years. We usually own our vehicle for 10+ years so Hondas are a great option for us. The hybrid models are particularly attractive because they are eco friendly cars and will save on fuel cost.
The only problem with Honda hybrid cars is that they are a bit small. This is good in general because you get better gas mileage with a smaller car. However, we only share one car in our household and we need it to be a bit more versatile. My parents are visiting more frequently now so our vehicle usually carries 5 people total. The hybrid vehicles are nice, but it can be difficult to fit 4 adults, a child seat, kid’s supplies, and groceries for 5 people + 2 cats. The new Honda CR-V would be a better fit for us right now.
Anyway, have you kept tabs on the total cost of owning your vehicle? The purchase price might be lower, but the fuel and repair costs can easily make a cheaper car more expensive to own in the long run. Don’t forget to keep the total cost of ownership in mind the next time you are looking to purchase a vehicle.
photo credit: flickr charlesdyer