Costs to Consider Before Buying a Car

Shopping for a car usually starts with two numbers: the price of the vehicle and the monthly payment. But those are not the only costs that will affect your budget.

Insurance, registration, interest, fuel, maintenance and even how quickly the car loses value can all change what that vehicle really costs to own. Before you decide what fits your budget, take a closer look at the expenses that are easy to overlook.

Taxes and Registration

In California, registration is not one flat fee. Costs can include registration, CHP fees, vehicle license fees, transportation improvement fees and local charges. Some of those costs depend on the vehicle’s value and where you live.

Sales tax can vary by location, too, because local district taxes may be added to California’s statewide rate.

The result? The amount you need at purchase may be higher than the vehicle price alone suggests.

Insurance

Two cars with similar prices can have very different insurance premiums. In California, factors such as the type of vehicle, where it is garaged, how much you drive and your driving record can affect what you pay. Before choosing a car, consider getting an insurance quote for the exact model you are considering. That gives you another real number to include when comparing vehicles.

Interest Over Time

A lower monthly payment may look easier on your budget, but a longer loan term can mean paying more interest overall. When comparing financing, look beyond the monthly payment. Review the interest rate or APR, loan term, amount financed and total cost of the loan.

A longer loan can also increase the amount of time you risk owing more on the vehicle than it is worth.

Maintenance, Repairs and Tires

Oil changes are only part of owning a vehicle. Tires, brakes, scheduled maintenance and unexpected repairs all need room in the budget. Costs can also differ considerably from one vehicle to another.

Looking into typical maintenance and repair costs before you buy can give you a better idea of what ownership may look like after you leave the dealership.

Fuel or Charging

Think about your actual routine. How far do you drive to work? How much time do you spend on the freeway? If you are considering an EV, will you charge primarily at home or use public charging?

For Southern California drivers, commute length and driving habits can have a meaningful effect on monthly vehicle expenses.

Depreciation

A vehicle also loses value while you own it. That may not show up as a monthly bill, but it matters when you eventually sell or trade in the car. Some vehicles retain their value better than others, so resale value is worth considering alongside the purchase price.

Look Beyond the Payment

Before deciding what you can afford, estimate what the vehicle could cost each month and each year—not just what appears on the loan statement. A car should work with the rest of your budget, from insurance and fuel to savings and everyday expenses.

Are you ready to finance your next vehicle? Parishioners Federal Credit Union can help you explore auto loan options that fit your needs.