How Do You Know How Much Your Car Is Worth – How much does your car cost each year? It may be more than you think. With insurance, gas/oil, maintenance, licensing, future repairs and more the list of car related expenses is quite long.
As a general rule, the average family spends about 15% of their income on transportation. That’s a lot of money! This means that 15% of our working life is spent on transportation.
How Do You Know How Much Your Car Is Worth
If the average family with children has an income of about $105,000 a year in Canada, that means the average family spends about $15,750 a year on transportation costs!
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If that investment carries over into retirement, the $15,750 a year in annuity would require a nest egg of $393,750 just to support the same level of investment in the retire.
So, not only will this family spend $15,750 a year on transportation, but they also need to save $393,750 before retirement to support future expenses. !
Spending $15,750 a year on transportation may seem like a lot of money, but as we’ll see, it’s easy to get there depending on the choices you make…
There are a lot of expenses that come with car ownership and the two biggest monthly expenses are insurance and oil/gas (and depending on where you live that might be also additional costs).
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Insurance costs can be high (and are likely to keep rising!). Depending on your age, driving history, where you live, and the type of car you drive, insurance costs can range from $70 to $200+ per month or $840 to $2,400+ per year.
Similarly, the cost of fuel depends on the quality of the fuel and the mileage. A fuel efficient car can burn 8L per 100km at $1.50 per litre, up to $12 per 100km. Driving 10,000 km to 20,000 km per year results in fuel costs of $1,200 to $2,400 per year.
A big car with less fuel can burn 12L per 100k which works out to $18 per 100km. Driving 10,000 km to 20,000 km per year will result in fuel costs of $1,800 to $3,600 per year for a large, fuel-efficient car.
Wondering how to keep your car fuel efficient? This guide from Natural Resources Canada shows fuel efficiency data for almost every new car being produced (the our Honda Fit averages 6.5L per 100km, how about your car?)
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On the cost of insurance and fuel, for those who are in the big city can easily have more insurance costs each month. Just the chance to park your car all day can cost hundreds a month.
The second cost is unusual or high car license fees. This varies by country but in Ontario it adds about $10 a month to the car.
Owning a car means dealing with repairs and maintenance. Finally things need to be repaired and maintained. Not doing regular maintenance will only cause more problems down the road.
Car maintenance costs vary based on the make, model, and age of the car. Some vehicles are reliable while others require constant maintenance. The condition/history of the car has a big impact on the future maintenance costs and there are many calculators available online that can help you estimate maintenance costs by depending on the specific vehicle you own.
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A good average is $0.05 per kilometer driven, but for some vehicles it can be as high as $0.08 per kilometer or more. You can get an idea of the cost of car maintenance using the calculator from CAA.
At $0.05 per kilometer to drive 10,000 kilometers per year will provide an average maintenance cost of $500 per year. This includes things like oil changes, new tires, and emergency repairs.
Driving is usually more upkeep. At 30,000 km per year the cost is $1,500 per year for the average car and up to $2,400+ per year for unreliable cars.
The final expense and most of the car is maintenance. You need to upgrade to a new (or newer) car if your old car is downgraded.
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Depending on the total cost of the new car and the number of upgrades that can add up quickly.
An estimate of a small car repair might be a used car for $25,000 with a $5,000 sale every 10 years. After sales tax is added on the difference the monthly cost comes to $188 per month or $2,260 per year.
Estimated auto repair costs can be close to $45,000 with a $15,000 trade-in over a 7-year period. This is an average of $404 per month or $4,843 per year.
A higher car improvement budget might be an $80,000 car and a $30,000 trade-in every 5 years. This works out to $942 per month or $11,300 per year.
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Depending on your maintenance frequency and the type of vehicle you own, the cost of repairs can easily reach $1,000 a month or $12,000 a year.
Adding up all the costs can be confusing and confusing. It’s pretty easy to see how a family spends $15,750 a year on transportation costs. What if you had better places to spend that money? But what if you want to spend that money on more vacations or saving for retirement? How to reduce the value of your car?
Make fewer of them: One of the easiest ways to reduce the cost of cars is to simply make them smaller. Instead of owning two cars you can own one, instead of one car you can go without a car. Of course, depending on where you live, and your access to other transportation, this is easier said than done.
Car downsizing: Another alternative to downsizing is car downsizing. Try to use other options like biking, walking, car sharing, public transportation etc. This will reduce costs quickly as you reduce fuel and maintenance costs, but most other costs will remain the same. Another benefit of downsizing is that you may find that you don’t need as much of your car, in which case owning a smaller car could be a choice.
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Buying used: Buying used and new is another easy way to reduce the amount of money spent on cars. New cars tend to depreciate quickly in the beginning so buying a used car that is 2-3 years old is a great deal. It is not always true but there are times when the demand for used cars is high and the profit of the sale is low.
Buy regular: The last way to save on car costs is to buy a used car. If your car is there for the purpose, to provide transportation from point A to point B, then buying a normal car instead of a very expensive or more expensive car is another easy way. to save money. An added bonus is that classic cars are usually cheaper to maintain.
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So, how much does your car cost you each year? It may be more than you think. When you add up the various costs, and factor in the cost of future upgrades, it’s easy to see how a household could end up spending $15,000+ a year in costs. of transportation.
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Saving money on transportation is not easy but it can be a great way to accelerate savings goals. Making a few smart decisions about car ownership can reduce the monthly cost of owning a car.
Reducing the annual cost from $15,000 per year to $7,500 per year could allow the family to have an additional $380,000+ in retirement and/or potential retirement years. That’s quite an incentive to lower future car costs!
Reach over 250,000 readers each year. New blog posts every week! Tax planning, benefits optimization, budgeting, family planning, retirement planning and more…How much is my car worth? Find out how to determine the value of your car before going shopping.
When it’s time to upgrade your car, the first step is to clean up your current car. You have two options: sell or trade. Both options have their pros and cons, but you must first know the value of your car to correctly calculate your budget for your new car.
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Fortunately, there are valuation tools out there to answer the question, “how much does my car cost?” We will install these tools and offer an easier way to them below.
To get an accurate market price for your car, you can search the internet for hours to find similar cars for sale and their prices. However, the year, mileage and mileage are not the only factors to consider when determining a price. You should consider condition, Carfax history, color, location, free financing, and more! Or, you can introduce a
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