Know The Other Costs of Owning
Your Next Car
Don't Forget These Expenses

Do your best to remember all the costs involved in purchasing a car. You may underestimate costs by forgetting a couple of major costs (example: car insurance). It's possible for auto insurance to add 50% to the cost of that new sports car per month especially for young drivers in sports cars. That alone can put you over budget.

Sales tax is another cost to consider. Six percent sales tax added to a $20,000 car will raise the price by $1,200. You will also want to factor in delivery charges, title costs, license plates, and extended warrantees. A $20,000 car can quickly turn into a $22,500 car (not including monthly insurance costs).

You may want to opt for a home equity loan instead of a regular car loan—it's tax deductible saving you more money. However, that particular option might not be attractive to everyone since it puts a lein on your home.

If insurance costs are not acceptable, see if you can find a relatively comparable type vehicle that rates lower in insurance costs. Of course you will need to first consult your insurance agent ahead of time before settling on the car you want.

Save money by purchasing 3rd party mechanical warrantees on the car, but still ask what the price would be for the dealer offered warrantee. On few occasions, the dealer warrantee may actually be a better deal. Many credit unions are able to offer these 3rd party warrantees. Joining a credit union is as easy as opening a savings account with them and may actually have more advantages than your current savings and checking account with your traditional bank.

There are two items of consideration that are often over-looked in operating car expenses. First, there are the general maintenance items such as oil changes, tires, tune-ups, brakes and the like. The other item is the car's reliability record. Sure that Trans-Am is blazingly fast and perhaps cool looking, but they are notorious for taking trips to the repair shop for mechanical problems. Perhaps the smaller Subaru WRX would fit the bill better and not have nearly as many reliability problems. Plus you get 4 wheel drive which is a bonus for people living in areas that get snow each winter and get better overall traction on the take-off. These 2 items, though being latent costs, should not be over-looked.

With the increase in fuel prices recently, you may be concerned with the cost of running your car or truck. If you are moving from a smaller car to a larger one or a pickup truck, consider the extra cost of needing more gas for that bigger engine.

Other guidelines for buying a car would be:

• Try to keep the costs within the 10 to 15 percent of your total income.
• Be prepared to pay more for insurance if you are use to insuring an older used car.
• Find a car with a safer crash record. This will have an impact on insurance costs.
• Ensure that you have more than one model in mind when purchasing a car. If a dealer for one model doesn't work with you, make a choice with another car and dealership unless you must have a particular car.
• Inquire about possible rebates. Some auto makers will be offering them while others are not. A rebate on one particular car can be the determining factor on purchasing one car over another.

Car Theft Rate Claims
Some reports will claim that one car has a higher theft rate than another car. This can be misleading if the wrong statistic is being highlighted. For instance, more Ford F-150's are stolen each year than are Toyota Tundras. But that doesn't mean an F-150 is more prone to be stolen. It's simply that there are more F-150's to steal. When considering that data, be sure to pay attention to percentages of thefts rather than raw numbers for the risk factor of theft. Of course you can help to minimize theft just by remembering to lock your doors.