My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 2020 with at least $3 million.


By Topics

Overall:
0. About (10)
1. My Progress (139)
2. Car & Home (107)
3. Credit (138)
4. Banking (33)
5. Saving (49)
6. Investing (308)
7. Taxes (89)
8. Spending (74)
9. Misc (97)
A. Archive (49)



MONTHLY ARCHIVE

Feb 2014 (3)
Jan 2014 (6)
Jan 2012 (1)
Apr 2011 (1)
Mar 2011 (1)
Feb 2011 (1)
Jan 2011 (1)
Dec 2010 (1)
Oct 2010 (1)
Sep 2010 (1)
Aug 2010 (1)
Jul 2010 (1)
Jun 2010 (1)
May 2010 (1)
Apr 2010 (1)
Mar 2010 (6)
Feb 2010 (2)
Jan 2010 (7)
Dec 2009 (3)
Feb 2009 (4)
Jan 2009 (8)
Dec 2008 (1)
Jun 2008 (2)
May 2008 (2)
Apr 2008 (5)
Feb 2008 (3)
Jan 2008 (15)
Dec 2007 (32)
Nov 2007 (6)
Oct 2007 (8)
Sep 2007 (9)
Aug 2007 (24)
Jul 2007 (2)
Jun 2007 (1)
May 2007 (3)
Apr 2007 (4)
Mar 2007 (4)
Feb 2007 (13)
Jan 2007 (6)
Dec 2006 (3)
Nov 2006 (7)
Oct 2006 (7)
Sep 2006 (6)
Aug 2006 (4)
Jul 2006 (10)
Jun 2006 (1)
May 2006 (3)
Apr 2006 (2)
Mar 2006 (6)
Feb 2006 (6)
Jan 2006 (3)
Dec 2005 (1)
Nov 2005 (9)
Oct 2005 (8)
Sep 2005 (13)
Aug 2005 (25)
Jul 2005 (16)
Jun 2005 (17)
May 2005 (19)
Apr 2005 (20)
Mar 2005 (24)
Feb 2005 (23)
Jan 2005 (36)
Dec 2004 (40)
Nov 2004 (34)
Oct 2004 (17)
Sep 2004 (21)
Aug 2004 (59)
Jul 2004 (37)
Jun 2004 (31)
May 2004 (29)
Apr 2004 (52)
Mar 2004 (49)
Feb 2004 (49)
Jan 2004 (31)
Dec 2003 (48)
Nov 2003 (52)
Oct 2003 (29)
Sep 2003 (8)
Aug 2003 (5)
Jul 2003 (2)
Jun 2003 (2)
May 2003 (5)
Apr 2003 (2)
Mar 2003 (2)
Feb 2003 (3)
Jan 2003 (29)



 

True Cost to Own A Car

Contributed by mm | June 18, 2004 11:18 PM PST

I am in the process of buying another car now, and one of the resources I used most of Edmunds.com's "True Cost to Own" feature. (As an example, look at this TCO report of my Camry.)

The True Cost to Own in Edmunds' definition includes the following seven parts:

Depreciation: This is the amount by which the value of a vehicle declines from its purchase price.

Insurance: This is the estimated average annual insurance premium being charged by insurers in your state. The premium has been determined based on industry-wide, state-by-state data from the National Association of Insurance Commissioners (NAIC)*

Financing: This is the interest expense on a loan in the amount of the True Market Value® purchase price (including typical equipment) plus the destination charge (for new cars) and the base sales tax and initial fees for your state, assuming a 10% down payment and a loan term of 60 months. The interest rate used is the prevailing rate that banks and other direct automotive lenders are charging consumers.

Taxes & Fees: Sometimes referred to as DMV fees, this consists of the base sales taxes, license and registration fees in your state, and gas guzzler tax if applicable.

Fuel: This expense is based on EPA mileage figures, assuming consumption consists of two-thirds highway and one-third city driving, and that the vehicle has an automatic transmission unless automatic is not available.

Maintenance: This is the estimated expense of two types of maintenance: scheduled and unscheduled. Scheduled maintenance is the performance of factory-recommended items at periodic mileage and/or calendar intervals. Unscheduled maintenance includes wheel alignment and the replacement of items such as the battery, brakes, headlamps, hoses, exhaust system parts, taillight/turn signal bulbs, tires and wiper blades/inserts.

Repairs: This is the estimated expense for repairs not covered by the vehicle manufacturer's warranties over the five years from the date of purchase, assuming an average of 15,000 miles are driven annually. This expense is based on the cost of a typical "zero deductible" extended warranty for the vehicle, minus the estimated amount of that cost that consists of the warranty provider's overhead and profit.

I found the above classification very useful, and in the case of my Camry, the depreciation, taxes and fees, and fuel cost are very much in line with my actual expenses. I paid cash for my car, so I don't have direct financing expenses, but I do have an opportunity cost of having my cash locked in the car. The TCO report overestimated my insurance, maintenance and repairs cost -- that can be because I comparison shopped my insurance, and my car is relatively of better condition compared to its peers.

When it comes to buying another car, I found the TCO report very useful in pointing out the depreciation potential of different makes, and some surprises in expected maintenance and repair cost. The calculated average cost per mile is also very indicative of real car ownership cost.

Be the First to Comment on this Post


Add Your Comments










Remember personal information?




(It will take a few moments for your comment to be published. Please do not close the window until then.)


Read More ... 107 Posts In The Same Category










This page was last rebuilt at February 09, 2014 08:29 AM PST. (490 Words)
 

RSS FEED





PERSONAL FINANCE BLOGS I READ

Consumerism Commentary
Get Rich Slowly
My Money Blog
All Financial Matters
The Simple Dollar






.



Copyright 2003-2014, PFBlog.com. All Rights Reserved. (Privacy Policy)