Topic: AAA Slices Up Costs Of Car Ownership

[Autos_Editor]

Depreciation, not fuel, is largest cost in owning a vehicle

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[dkaz]

Unless you own the car long enough to spend more on fuel than the car was worth brand new.

Or you bought a vehicle dirt cheap. I paid $1427 for my 99 Sienna and wonder if it could possibly depreciate. I've already spent $1249 on fuel since acquiring it last September. So unless I have pay someone to take my vehicle, I think I beat depreciation. 

[mmret]

Its kind of funny that you remember all the way down to teh $27

[dkaz]

It was last September lol. And it was $1427 because with GST and PST it was $1600. From a dealer that seems shady when you see it but the guy was very honest and good to deal with. No admin or dealer fees, gave me full Carfax type report, the asking price was $1899 so I was extremely surprised he was willing to go so low. Hopefully he picked it up at an auction for $800 or something.

[PJ]

It really shows how much you can save buying used. 

I bought a 98 Taurus for $1500 4.5 years ago.  Still worth about $1500 so depreciation is zero

Paid cash so financing costs are zero

Insurance and licence total about $1000/ year

Gas is about $3000/ year

Repairs total about $600 so far so $150/year and $75 for maintenance.

Gas is by far the biggest expense. 

[johngenx]

That massive depreciation cost is why I've bought so few new cars in my life compared to used cars.  I've bought new cars and just acknowledged up front that I wanted a new car, and was biting the bullet on the cost.

The worst of course is the more expensive new cars.  If you want to buy new and minimize the depreciation hit, then a Corolla/Civic is your best bet.  They don't cost a lot up front, and depreciate less than others in the segment.

I've for sure spent more on fuel for the Highlander than the depreciation cost so far.  Would not have been so had we bought a new one.  No even close.  And a new Highlander is one of the best bets for minimizing depreciation costs when it comes to buying an SUV.

[OliverD]

It really shows how much you can save buying used. 

I bought a 98 Taurus for $1500 4.5 years ago.  Still worth about $1500 so depreciation is zero

Paid cash so financing costs are zero

Insurance and licence total about $1000/ year

Gas is about $3000/ year

Repairs total about $600 so far so $150/year and $75 for maintenance.

Gas is by far the biggest expense.

But... You're stuck driving a 1998 Taurus.   

[PJ]

It really shows how much you can save buying used. 

I bought a 98 Taurus for $1500 4.5 years ago.  Still worth about $1500 so depreciation is zero

Paid cash so financing costs are zero

Insurance and licence total about $1000/ year

Gas is about $3000/ year

Repairs total about $600 so far so $150/year and $75 for maintenance.

Gas is by far the biggest expense.

But... You're stuck driving a 1998 Taurus.   

Yeah.  That's the sad part. 

[blotter]

depreciation on a new car doesn't matter that much if you keep it for 10 or plus years, but we all know nearly nobody keeps cars for that long anymore.


There's something wrong with this article.
The article states yearly cost of ownership.
I can't see how the "average" vehicle loses $3,500 PER YEAR on depreciation.
(That's $10,500 after three years) - I don't think a single Toyota or Honda is $10,500 cheaper after 3 years.


What I'd really love to see if a study of total cost between
1) 3 years leases
2) new car ownership every 5 years
3) new car ownership every 8 years
4) 3 year old car ownership for 4 year periods.

take each scenario of ownership over a 40 year total period.
now that would be interesting!

[johngenx]

A three lease on a $30K car is easily $400/month with nothing down and a realistic residual.  That's about $5K a year in depreciation and interest.

We looked at 3-4 yr old Highlanders that were about $10K under original MSRP.  From $36K down to $26K.  Lots of $30K cars can be had for $16-18K after three years.  Think about how much some models can drop.

Then add in some of the big numbers posted by cars like MB/BMW/etc, and even in their low volumes, that can add up.

Is a $20K Corolla worth $10K in three years?  No, but it's not an "average" car in terms of depreciation.

[goodsonr]

I must admit I tend to think about a car purchase about the same as I do for a new fridge or couch .. that is .. once the money is spent .. its spent .. all of it ...gone .. no more... vaporized.   I realize its not really like that .. but that is how I view it... it depreciated to zero as soon as the money left my wallet.

The only difference is that the car is worse because it's keeps on ripping money out of my wallet .. unlike a couch.

This is good .. as it means I don't buy unless I can really afford it.  It is bad, though, because I have a hard time buying something "just to try" .. even if I know I could flip it for only a slight loss a short time later.

[X-Traction]

It would be excellent to see information such as this put in front of people more.  Most people don't have a clue how much it costs them to own cars, and most people think the thing they spend the most on is gas. Certainly they have hernias every time gas goes up a few cents.  But they don't blink when they choose to buy a fancy car to impress their peers.

People don't factor in the cost of car commuting when choosing to buy a plastic palace on a big lot in the 'burbs or countryside as opposed to a smaller place that's more urban or next to transit.

Which brings up another matter.  Transit systems are always stressed for money. They have to choose between trains and buses.  Service levels vs expansion etc.  The public observes this and has opinions about service levels, fare costs and subsidies.

A useful perspective is that the average person spends something on the order of $350 per year on transit fares and subsidies.  While they're spending $10,000 per year per car.  Well, what sort of useless transit system do people think they're going to get when they spend such a pittance on it?

Wait, there's more...  The AAA graph is blatantly deceptive because it doesn't include the thousands of dollars per car spent on obvious subsidies per car, such as roads and traffic policing.  Sooner or later this money comes out of the pockets of everyone including car owners.  And even that does not include costs that are externalized, such as gobbling up valuable land, all sorts of pollution, accidents and driving up the price of fuel.

Societies can't make rational decisions when people have such a distorted or limited grasp of issues.

[PJ]

It would be excellent to see information such as this put in front of people more.  Most people don't have a clue how much it costs them to own cars, and most people think the thing they spend the most on is gas. Certainly they have hernias every time gas goes up a few cents.  But they don't blink when they choose to buy a fancy car to impress their peers.

People don't factor in the cost of car commuting when choosing to buy a plastic palace on a big lot in the 'burbs or countryside as opposed to a smaller place that's more urban or next to transit.

Which brings up another matter.  Transit systems are always stressed for money. They have to choose between trains and buses.  Service levels vs expansion etc.  The public observes this and has opinions about service levels, fare costs and subsidies.

A useful perspective is that the average person spends something on the order of $350 per year on transit fares and subsidies.  While they're spending $10,000 per year per car.  Well, what sort of useless transit system do people think they're going to get when they spend such a pittance on it?

Wait, there's more...  The AAA graph is blatantly deceptive because it doesn't include the thousands of dollars per car spent on obvious subsidies per car, such as roads and traffic policing.  Sooner or later this money comes out of the pockets of everyone including car owners.  And even that does not include costs that are externalized, such as gobbling up valuable land, all sorts of pollution, accidents and driving up the price of fuel.

Societies can't make rational decisions when people have such a distorted or limited grasp of issues.

Plastic palace?  Beats living in a hole in the wall of a concrete pillar.  I never understand why people choose to pack themselves into a congested urban setting and live with the noise, pollution and crime.  Hey kids, go play in the alley and stay out of the dumpsters.  No place for a family. 

What we need to do is get more companies to move out of the downtown core.