Why the cheapest car is not always the cheapest to own
Purchase price is only one part of what a car costs. Fuel, insurance, maintenance, repairs, financing and depreciation often add up to more than the price over several years. Industry estimates such as AAA's annual Your Driving Costs report show running costs are substantial and vary widely by vehicle type.
Running costs dominate
AAA's Your Driving Costs study estimates average annual ownership costs for new vehicles in the US run to many thousands of dollars per year once fuel, insurance, maintenance, finance and depreciation are included.
Reliability matters
Reliability surveys from organisations such as Consumer Reports show large differences in repair frequency between models. A cheap but unreliable car can cost more over time.
Fuel efficiency and insurance
Fuel use and insurance group affect monthly costs for as long as you own the car.
Regional variation
Fuel prices, insurance rules, taxes and labour costs differ by country, so local data should be used.
Interpretation
Compare total cost of ownership over your expected ownership period rather than sticker price alone.
Key Takeaways
- Price is only part of the cost.
- Reliability affects repair bills.
- Fuel and insurance recur monthly.
- Compare total cost of ownership.
Frequently Asked Questions
They often depreciate less, but repairs can be higher. Compare total costs.
Depreciation and fuel are often largest, followed by insurance and repairs.
References
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