What a New Car Really Costs
Car Cost
At a time when car ownership is not an option in most US locations, the financial strain felt on our middle class as a result is staggering. Did you know that 64% of American debt is non-revolving loans, such as student and auto loans? The same statistics say that the average car loan is $30,400 or more. With those buyers investing only a 9% down payment, they are financing the other $27,664. With the average American salary being just shy of $30,000 a year, you can see what a serious investment new car ownership is on Americans.
Financing cost
In 2009 The Fed reports the average APR on auto loans was 3.82% with a finance term of just over 60 months. The total monthly payment works out to be $507.23 per month at those rates. In 60 months you will have paid back $30,433.8 totaling $2,736 paid in interest.
Insurance
In the second quarter of 2010 the average auto insurance rate was 1,812. Which works out to be $151 per month. Again, quite an expense when having car insurance is required by law. Combined with the auto loan payment the total is up to 658.23 per month.
Gas
In 2009 the average American spent $2,208 on gas, or $184 per month. Added with the previous costs, we are at a total of $842.23 per month.
Total Cost
Just combining the expenses we have talked about, setting aside regular maintenance and unexpected maintenance, the total yearly expense for a new car, based on the national averages would be $10,106.76 per year. Multiply that by 5 years (60 months) and the total amount that you paid to own a new car was $50,533.80.
How staggering is it that on average we spend 1/3 of our annual salary just to drive a new car?
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