Chapter 5: Counting The Cost (Continued)

•  Financing
  
•  Taxes
  
•  Insurance
  
•  Upkeep
  

Upkeep: maintenance, repairs and depreciation:

All vehicles cost money to maintain properly and this is a substantial factor to consider.

The following table gives a breakdown of appropriate maintenance versus mileage.

Note: Even a lower priced new vehicle will cost nearly $5,000 over five years of ownership for regular scheduled maintenance.

Repairs are a substantial expense that should be accounted for in the car buyer's annual vehicle budget. This cost can be affected by a couple of factors, warranty and vehicle choice.

•  Today's new vehicle warranties commonly cover 3 years or 36,000 miles and apply to all items except those mentioned in the table above. Outside these costs, it is estimated that repair costs typically range between $800 and $2,400 over the first five years of car ownership. This amount is affected by the warranty you have. A lesser warranty, of 1 year and 12,000 miles, for instance, will make open you up to the possibility of higher expenses.
  
  
•  Don't underestimate the cost of maintaining a luxury car such as a Mercedes, BMW, Jaguar or Porsche. The estimate for the first five years of ownership of a vehicle in this class is $2,400 to $6,000.
  

Depreciation is a factor if you lease a vehicle or if you buy new with the intention of selling within four years.

•  With a leased vehicle the payments themselves are a reflection of the depreciation and they can be lower if the vehicle you are leasing maintains its value better.
  
  
•  If you plan to sell a vehicle within four years of buying it, an expected depreciation difference of a few percentage points may impact your selling price in the thousands. For example, if you buy a car for $30,000 that is expected to be worth 70% of its value after four years, you should be able to get $21,000 for it. If you spend the same amount on a car expected to be worth 60% of its value, you may only receive $18,000 for it when you sell it. The second car therefore cost you $3,000 dollars more for the same four-year driving period-close to three dollars a day!

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