The Real Cost of Owning a Car in Your 20s — It’s Not the Payment That's the Issue
When driving home for the first time with your new car, it’s most likely the sizable monthly payment that looms largest for you on the horizon. That said, it’s not just the car payment that can derail your finances in your 20s – it’s everything in addition to the monthly loan payment that adds up fast.
Per AAA, it costs roughly $12,000 annually (or approximately $1,000 monthly) to own a car. That possible $12,000 isn’t from car payments alone – there are a number of surprise fees that add up quickly.
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Depreciation
Average yearly cost: $4,680
Auto depreciation makes up a staggering 38% of annual car ownership costs, according to AAA. More than any other fee, it’s depreciation that can cost a new car owner.
Fuel
Average yearly cost: $2,000
Taking your new car on the road requires fuel, and fuel costs money – the more you drive, the more you’ll spend.
Auto Insurance
Average yearly cost: $1,715
Car insurance is a legal necessity for car owners, and can be especially expensive for younger drivers under the age of 30. Want your wheels on the road in your 20s? It’s going to come with considerable insurance rates.
Maintenance
Average yearly cost: $1,200
Oil changes, tire rotations and changes, fender benders – putting a car on the road means incurring the kind of wear and tear that requires such maintenance and repairs as these.
Registration Fees and Taxes
Average yearly cost: $815
Much like insurance, paying for taxes and registration fees is a legal requirement to own a car, and it’s a cost that can take a young driver by surprise when they’re focused solely on a monthly loan payment.
These costs – when coupled with a comparatively low monthly car payment – can add up and quickly drain the finances of a person just starting out on their own in their 20s.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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