4 Tips to Lower the Rising Cost of Car Ownership
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According to AAA, it's more costly to own and operate a vehicle than it was last year. They blame gas, tires, and depreciation -- but we have tips to save on all three.
It's not just the cost of gas that's going up. The overall cost of driving has also increased this year, AAA says.
Their recently released 2011 Your Driving Costs report shows that the cost to own and operate the average sedan has risen 3.4 percent -- to $8,776 a year, or 58 cents a mile. For SUVs -- the most expensive type of vehicle to own -- the cost has jumped to $11,239 a year ...
Based on driving 15,000 miles annually | Small | Medium sedan | Large sedan | Sedan average | SUV 4WD | Minivan |
Cost per mile | 45.1 cents | 57.3 cents | 73.2 cents | 58.5 cents | 74.9 cents | 63.3 cents |
Cost per year | $6,758 | $8,588 | $10,982 | $8,776 | $11,239 | $9,489 |
"Despite seeing reduced costs for maintenance and insurance this year, there is an overall increase in the costs to own and operate a vehicle in the U.S. this year," said John Nielsen, an AAA director. "The 2011 rise in costs is due to relatively large increases in fuel, tire, and depreciation costs as well as more moderate increases in other areas."
So let's break down those last three causes and see if Money Talks News can't help you drive a little more cheaply than the average motorist ...
1. Fuel
The cost: About 12.34 cents a mile, a 8.6 percent increase.
The reason: It's not what you think -- a shortage of oil, or maybe unrest in the Middle East. Today's rising oil prices are related more to what's happening in New York than in Libya, as speculators make huge bets on oil prices.
Our advice: The price of gasoline may dip in coming months, but the long term trend is up. That leaves you with three options: Buy a more fuel-efficient car, try public transportation, or just learn to stretch your gas dollars further. Little things like turning off the A/C, rolling up the windows, and not idling for long stretches can make a noticeable difference.
2. Tires
The cost: About 0.96 cents a mile, a 15.7 percent increase.
The reason: "The rise in costs of raw materials, energy, and transportation has led to notable tire price increases in recent years, and 2011 is no exception," AAA says. "Also contributing to higher average tire costs is a trend by automakers to equip their sedans with premium-grade tires as original equipment."
Our advice: It won't make your tires any cheaper, but regularly checking your tire pressure and inflating when needed will increase fuel efficiency and decrease wear and tear. If you don't know how to check your tires, find out: It's not difficult.
3. Depreciation
The cost: $3,728 a year, a 4.9 percent increase.
The reason: Depreciation is the gradual loss of your car's value. So as the price of cars rises, so does the annual depreciation expense. AAA says depreciation is "the largest cost for vehicle owners" -- yet is "the most frequently overlooked by consumers determining the cost of owning and operating a vehicle."
Our advice: New cars typically lose 40 percent of their value within the first three years. That's why it's best not to buy them. Buying used will reduce this expense dramatically.
4. Other Stuff: Insurance, Maintenance and Financing
Insurance and maintenance costs actually declined, according to the 2011 study. But that's no reason to ignore these expenses. When it comes to insurance, raise your deductibles to the highest levels you can comfortably afford, make sure you're receiving all discounts you're entitled to, and regularly shop your policies.
As for maintenance, do what you can yourself, and remember that a little preventative maintenance now can save you big repair bills later.
Then there's financing. According to AAA, the average car owner pays $823 a year in interest. Simple way to bring that cost to zero? Don't borrow money to buy depreciating assets. Or at least borrow as little as possible and pay it back as soon as possible.
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