# Cost of car ownership



## namelessone (Sep 28, 2012)

http://www.consumerreports.org/cro/2012/12/what-that-car-really-costs-to-own/index.htm

It's painful how much car ownership costs:$3000 carrying cost + $ 3000 operating cost. Imagine compound $6000 new money per year for 40 years at 7% ? That's 1.3 million! But the infrastructures are designed for cars. It's hard to get anywhere without a car. I felt trapped in a prison before owning a car. 
After some thought, It seems we cant cut down car ownership cost much. Let's say a new car costs $30k and one stretches it for 20 years. The carrying cost is only cut in half compared with someone drives it for only 10 years. So is it really worth it to drive an out dated car for an extra 10 years to save $1500 per year out of $6000 annual cost? There are safety concerns and minor cosmetic disadvantage. One of my co-work er drives a rusty 18 years old truck and its not pretty. The front and bsck brake lines failed two years in a row not long ago.

There's a limit how much we can reduce cost and there is more room for investment gain.

I think my plan in the futue will drive a car to a maximum 10 years old and keep the total cost relatively fixed at 6k per year. and save a lot of paycheck k and get decent investment return. I save 20% of my gross pay even I make only 30k per year and own a house and car. For investment, I aim for 10% to 15% return from buy and hold stocks.


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## nobleea (Oct 11, 2013)

namelessone said:


> http://www.consumerreports.org/cro/2012/12/what-that-car-really-costs-to-own/index.htm
> 
> It's painful how much car ownership costs:$3000 carrying cost + $ 3000 operating cost. Imagine compound $6000 new money per year for 40 years at 7% ? That's 1.3 million! But the infrastructures are designed for cars. It's hard to get anywhere without a car. I felt trapped in a prison before owning a car.
> After some thought, It seems we cant cut down car ownership cost much. Let's say a new car costs $30k and one stretches it for 20 years. The carrying cost is only cut in half compared with someone drives it for only 10 years. So is it really worth it to drive an out dated car for an extra 10 years to save $1500 per year out of $6000 annual cost? There are safety concerns and minor cosmetic disadvantage. One of my co-work er drives a rusty 18 years old truck and its not pretty. The front and bsck brake lines failed two years in a row not long ago.
> ...


I don't think the numbers are that high. We have two 2013 vehicles (mid size) and I think are depreciation costs are $250/mo combined (so half of what they have). Operating costs are probably close when you count insurance, gas, oil changes, and regular maintenance like tires and brakes. My wife and I have owned 9 cars together. Only one of them had a depreciation of over 175/mo. Never owned one for more than 6 years, and average age of 5 yrs old when we bought them.


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## OptsyEagle (Nov 29, 2009)

The most important point of this post is that this is a good area to focus if you want to save some serious money. You can bag your lunch everyday and it will not even come close to the money a family can save by getting rid of that 2nd car that pretty much sits in the driveway or at your place of work, the majority of the time. If you can't get the conviction to get rid of the 2nd car, for the love of money, do your family a huge favour and make sure it is at least an old beater of a car.


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## Sherlock (Apr 18, 2010)

Well, you could buy an old classic car. It won't depreciate, might even appreciate.


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## My Own Advisor (Sep 24, 2012)

OptsyEagle said:


> The most important point of this post is that this is a good area to focus if you want to save some serious money. You can bag your lunch everyday and it will not even come close to the money a family can save by getting rid of that 2nd car that pretty much sits in the driveway or at your place of work, the majority of the time. If you can't get the conviction to get rid of the 2nd car, for the love of money, do your family a huge favour and make sure it is at least an old beater of a car.


Our secondary car sits in our garage 6 days a week. For this reason, I'm glad it's a rusting 15-year-old Mazda. Not worth having a new(er) car sit around most days depreciating in value.

To each their own though, some people just want to have stuff that impresses other people!


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## Ag Driver (Dec 13, 2012)

Deleted


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## DollaWine (Aug 4, 2015)

The simplest way and most effective way in my opinion is to just buy an older car with cash... No payments, no nothing. Obviously ensure that it's mechanically sound and do your research on the specific model first. Cars are meant to last upwards of 15 years... there's nothing wrong with buying a 7 or 8 year old one. Most cars looked better in the past anyway... I'm a car buff and newer cars don't often appeal to me. Too many buttons, gadgets, screens, etc. Even when I'm financially successful down the line in the future, I still can never see myself leasing or financing a brand new car, or even a 2-3 year old car. I just can't fathom making monthly payments into something that's _depreciating_ as time goes on. Rather just pay a couple grand in cash and be done with it. And find a good local mechanic who will charge WAY WAY less than the *st*ealership. 

In 2020 I'll probably be driving a 2010... and a nice one. With no monthly payment to go along with it.


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## namelessone (Sep 28, 2012)

OptsyEagle said:


> The most important point of this post is that this is a good area to focus if you want to save some serious money. You can bag your lunch everyday and it will not even come close to the money a family can save by getting rid of that 2nd car that pretty much sits in the driveway or at your place of work, the majority of the time. If you can't get the conviction to get rid of the 2nd car, for the love of money, do your family a huge favour and make sure it is at least an old beater of a car.


This idea is the 80/20 rule, aka pareto principle . I Shake my head when people telling me to unplug appliances when not in used which probably drain less than a watt. Meanwhile, these people keep upgrading to bigger houses they dont need and buy new car every couple years. 
To start from zero in life, It's a good idea not to drive a car in school and wait a few years working to have a jump start in life. I only bought a used car out of necessity when I needed to take dad to hospital frequently.
The result is after 7 years working full time at an average paying job, I have sizble investment portfolio, a house with 60% equity, and a used car with no car loan.


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## namelessone (Sep 28, 2012)

Ag Driver said:


> I wish I could not own a vehicle, but it is simply not feasible -- I need a vehicle in order to have income.
> 
> To curb the overall expense of a vehicle, I go by the following: Buy around 5 year used sub ~100k and drive for 5 years, $15k as the cap vehicle price -- taxes in, and increase all deductibles to $1000. This helps keep maintenance expense down, has SOME resale, and lower insurance premium as I am willing to put my money where my mouth is in terms of my driving. Minor maintenance is done by my self to keep those costs down.
> 
> That being said, please tell me where you find a guaranteed annual 7%!!


When you buy used car with close to 100km mileage. Don't you need to worry about changing timing belt , brake, rtc? It's big expenses.

Where to get 7% ? Not guaranteed but it's estimated return from owning the index fund.
Investing is like many things jn life: more effort equals more reward. Buying index find is effortless. Buying individual stocks to hold takes little more mental power but picking stocks is way easier than working a, any 9 to 5 jobs. If you keep learning and be a critical thinker, it's not hard find a basket of high quality stocks generating 10 to 15% per year and sleep well at night. One of my best buy and hold positions is dollarrama. I can give two more: CCL.B and RCH.


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## namelessone (Sep 28, 2012)

It also helps to live close to work. I bought an affordable house 2km from work.Even I come home for lunch, I drive only 5000km per year. I feel so happy and relax eating lunch at home. It seperates morning and afternoon and make the day much more enjoyable than stuck at the job for the whole day. I save lots of gas compared to most people. People with high paying,stressful job , long commute(meaning traffic) and big house is not better off than people with average paying/ low stress job, short commute(meaning no traffic) and small house.


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## OnlyMyOpinion (Sep 1, 2013)

namelessone said:


> ... it's not hard find a basket of high quality stocks generating 10 to 15% per year...


Really? That's very impressive if you are saying that your total portfolio has made 10%-15%/yr consistently and over an extended period (say 10+ years).


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## cainvest (May 1, 2013)

namelessone said:


> When you buy used car with close to 100km mileage. Don't you need to worry about changing timing belt , brake, rtc? It's big expenses.


If you learn how to fix and maintain your car yourself it'll save you lots of money in the long run. Even simple body work if you care about how it looks can be done cheaply though the best is to prevent it in the first place.


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## none (Jan 15, 2013)

Whenever I get close to buying a car I do the math and it pushed me away. Renting cars and belonging to a car share works really well for me.

I like biking to work too.

I'll likely buy a car in another year or two but I like the piece of mind I get from not owning.


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## nathan79 (Feb 21, 2011)

I earn much less money than some here, but I don't find the cost particularly high for the value it provides. Your mileage may vary, I guess.


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## brad (May 22, 2009)

Last year I calculated how much our car cost per year: it came out to $5,000 total. That includes taking the purchase price of the car (plus taxes etc.) and spreading it out over the nine years we owned it, plus fuel, maintenance, parts, repairs, registration, and insurance. I've been tracking all those expenses for years, first in Quicken and then in another program that I use now. We got rid of our car last year and now use public transit, bike, car-share, and rentals to get around. I figure as long as we spend less than $5,000 annually on average on transportation we're coming out ahead. So far this year we're on track to come out ahead but not by a huge margin, in part because we had an unusually large number of long road trips to take this year. Next year should be more typical.


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## Sherlock (Apr 18, 2010)

There's something to be said for owning a car that's old enough that you don't care if it gets dinged by a shopping cart, etc. I was thinking of upgrading my car with something newer but I think I'll just keep it, it still runs great. Will need some work soon (new timing belt and water pump among other things) but the cost to do that is well below what it'd cost for a newer car.


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## none (Jan 15, 2013)

brad said:


> Last year I calculated how much our car cost per year: it came out to $5,000 total. .


There's also this you can use: http://caa.ca/car_costs/


The math always seems weird - I rented a car for a day the other day and it was a last minute thing and a long trip with a car share so it was $80 including gas. That seems like a tremendous amount but that's still less than just the insurance for a typical car for a month.

Costco rental cars helps the math a tremendous amount. Renting a car for $150 for a week (with taxes) is pretty hard to beat.


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## namelessone (Sep 28, 2012)

Sherlock said:


> There's something to be said for owning a car that's old enough that you don't care if it gets dinged by a shopping cart, etc. I was thinking of upgrading my car with something newer but I think I'll just keep it, it still runs great. Will need some work soon (new timing belt and water pump among other things) but the cost to do that is well below what it'd cost for a newer car.


I want to keep driving a 2007 car until its 15 years old (replace in 2022) and next one until 10 years old. I scratched the side against the wall one day and fixed it myself for $80 bucks. The leftover paint can be used for many years to come. It's not perfect fix but good enough to hide it from a distance.

I drive only 5000 km per year. Maybe it can last a longer time than expected. It's very clean.

If it cost ~$1000 to replace timing belt and water pump, its still cheaper than $3000/year depreciation during first 10 years.

From OP link:" In the end, it is almost always less expensive to hang on to your current car than to buy a new one. Even the most-expensive repair bills for an old car can't outweigh the cost of depreciation on a new one."


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## CPA Candidate (Dec 15, 2013)

Last winter the car I drove to work got written off by a careless driver and my wife and I were forced to carpool. In short, my 15-20 minute commute turned into 60 minutes as we drove all over town to make it work everyday. We had to start getting up earlier and I was chronically exhausted as I am anything but a morning person. We were saving money but wasting time and were miserable because of it.

In the spring I got another vehicle and we are back to driving our separate routes to work, getting up later, less time stuck in frustrating traffic.

Not everything that has value can be measured in dollars. Time has value, less grief has value, less stress has value.

Today it was reported that the City of Winnipeg is short buses because they cannot repair them fast enough and rush hour buses have been reduced, meaning more tightly packed buses and more waiting. I took the bus to work one time, instead of a roughly 40 minute round trip by car it was a 90 minute round trip that required two buses each way.

For me, the cost of a car is totally justified. The issue I have with personal finance gurus that eschew cars is that they only value money. They place no value on freedom of movement, no value on convenience, no value on time, no value in not waiting for some godforsaken bus in -35C weather in January.


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## none (Jan 15, 2013)

CPA Candidate said:


> For me, the cost of a car is totally justified. The issue I have with personal finance gurus that eschew cars is that they only value money. They place no value on freedom of movement, no value on convenience, no value on time, no value in not waiting for some godforsaken bus in -35C weather in January.



I totally get that. if you can figure out how to have a great life without owning a car then that's a double win.

That's actually the biggest issue I have with people who buy houses. They trade rental freedom so they can buy a house out in the burbs and as a result have a one hour commute each way. How does owning a house under that scenario actually improve your quality of life which is both a function of money & time.

It's like renting a small place. My quality of life is better this way because I can afford to vacation more and go out for nice dinners. I like my life better being able to do that rather than mowing my lawn everyweekend and having a crap commute. Like a car, I find the extra money and the financial certainty of not having to worry about accidents or car repairs (plus biking is super fun + health benefits) far outweigh the life benefits I would get from owning. Every one's life is different.


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## sags (May 15, 2010)

I read of a retirement home (maybe it was on CMF) where they had an old car in the lobby that people liked to sit in and polish up.

The residents loved it.

We are emotionally attached to cars and I suspect it will always be so.


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## GreatLaker (Mar 23, 2014)

I bought a new 1994 Honda Civic that I kept until 2012 (18.25 years).

Total cost per year was about $3480, including purchase price, gas, oil changes, all manufacturer recommended maintenance, repairs, insurance, licensing, drive clean inspections, and it was driven average 14,000 km/yr. The first set of tires lasted 90,000 km, and when sold it still had the original rear brakes and rear shocks.

So that kinda sets a floor for how much per year a new economy car kept for a long time costs. It still seems like a lot for such a bare bones vehicle.


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## brad (May 22, 2009)

CPA Candidate said:


> For me, the cost of a car is totally justified. The issue I have with personal finance gurus that eschew cars is that they only value money. They place no value on freedom of movement, no value on convenience, no value on time, no value in not waiting for some godforsaken bus in -35C weather in January.


Yeah, for us the cost savings were just about the last reason we decided to go car free. We were driving very little (the car was 9 years old and only had about 70,000 km on it) and we hate driving in the city so we were already biking, walking, or taking public transit everywhere. I hate maintaining cars and we don't have a garage or even a driveway so I had to park on the street, remembering to change sides of the street twice a day on street-cleaning days, shoveling out the car in winter, etc. -- so for us the car was more of an encumbrance than a convenience. We are much happier without it. But that's just us and our lifestyle.


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## namelessone (Sep 28, 2012)

CPA Candidate said:


> Last winter the car I drove to work got written off by a careless driver and my wife and I were forced to carpool. In short, my 15-20 minute commute turned into 60 minutes as we drove all over town to make it work everyday. We had to start getting up earlier and I was chronically exhausted as I am anything but a morning person. We were saving money but wasting time and were miserable because of it.
> 
> In the spring I got another vehicle and we are back to driving our separate routes to work, getting up later, less time stuck in frustrating traffic.
> 
> ...



Totally agree. Time is the most precious non renewable resource in the world. 

But for someone starting from nothing, money consideration comes first before convenience.
Later, when income and asset increases to certain level, having a car is nice.

I have a good friend living only 20 km from my place. If I drive, it takes 30 minutes. I can go to friend's house to have a dinner in short notice. If I take bus, it takes one and half hour ! due to some non-straight route. It'll be a torture.

I also remember waiting under -20 degee celcius for a bus. That bus is supposed to come every 30 minutes. and the bus missed one schedule and I stood there frozen for 1 hour with no shelter.


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## SpendLessEarnMore (Aug 7, 2013)

When I was working in Calgary I drove $500 cars all the time. People were selling them because they were either temporary workers leaving the country or someone that needed money. I even had one call me a year later asking to buy back the car.

Insurance was cheap too just $400/year for the most basic. And I sold them all easily for $500. Never had any major mechanical problems which was surprising or lucky.

Now I'm in Toronto where insurance alone is $1600/year for most basic coverage.


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## SpendLessEarnMore (Aug 7, 2013)

namelessone said:


> Totally agree. Time is the most precious non renewable resource in the world.
> 
> But for someone starting from nothing, money consideration comes first before convenience.
> Later, when income and asset increases to certain level, having a car is nice.
> ...


Ah fond memories. I was so poor living in Toronto because I invested all my money into a house in 2009. So I packed what I can on my 250cc scooter and rode out to Calgary. Within a day I landed a job.

I remembered bussing to work standing in -40 degree celsius weather without a toque or hoodie. Some days the bus would not run at all due to holidays or stop running at certain times of day. So I walked an hour to the c-train station on icy snowy pathways.

I got lucky making tonnes of money from my job and housing boom in Toronto. But I still won't forget my roots no matter how much better off I am today. But with a kid and wife now you can't scrimp on cheap cars. Safety and convenience is most important when you have others to worry about.


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## Valueinvestor (Dec 10, 2014)

Vehicles are a cash sucker but huge time value comes with them. Try using public transit on a Sunday morning rather than driving.


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## Eclectic12 (Oct 20, 2010)

namelessone said:


> When you buy used car with close to 100km mileage.
> Don't you need to worry about changing timing belt , brake, rtc?
> 
> It's big expenses.


Having kept cars fourteen years and eighteen years - I don't recall the timing belt being expensive. I've never done anything for brakes beyond getting the pads replaced as well as regular adjustments.

Of course it helps that I was buying them at one year old so I know what maintenance had and had not been done of almost the entire life of the car.


The rust part seems to me to be YMMV as the first car had rust as I was a student and didn't take care of it properly. The second one with 18 years on it would need a search to find the two rust spots on the visible body (no problem finding rust on the under side!).


The expenses look high to me but then again, I happily changed the oil, changed the electronic ignition module on my own after the first two, swapped summer for winter tires myself ... etc.


Cheers


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## AirPro (Mar 31, 2014)

Eclectic12 said:


> Having kept cars fourteen years and eighteen years - I don't recall the timing belt being expensive. I've never done anything for brakes beyond getting the pads replaced as well as regular adjustments.


At between $20-$80 timing belts are pretty cheap but the cost to install can vary greatly depending on how (in)accessible it is, whether you use the dealer etc. Also there are a number of other components recommended for replacement "while you're in there" typically water pump, idler(s), tensioner, cam seals, cover gaskets etc. Depending on the vehicle and source these additional parts can easily push the parts cost alone to well over $500. Expect to pay anywhere between $400 and $1700 all in.

At that age you may also be up against changing brake rotors, brake fluid, coolant transmission fluid etc. On a manual you'll probably be facing a clutch replacement soon. It can quickly add up.

It's certainly something to consider if the vehicle is reaching that magic number and it's often these type of expenses that the seller is tryig to avoid by selling.


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## Sampson (Apr 3, 2009)

re: timing belts...

make sure you look into the precise model. Timing chains are pretty common these days so that is a mute expense at 100k km.


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## MrAdventure (Feb 26, 2015)

I bought a 5 speed manual 2004 civic dx with 198k kms for $2800 in 2013. I changed the timing belt when I bought it ($350), but aside from that, no major expenses. I put on 40000 km a year with oil changes and headlights being the only real maintenance. It's still probably worth $1500. 

Millionaire teacher's advice is to buy something used for cheap, keep it for two years and then sell it for close to what you purchased it for. It saves a lot of money!

I thought about replacing it with something newer, but it runs fine and hopefully will get me another couple years (278000 km now!), especially as I'm doing highway miles. When I do replace it, I'm going to buy another 10-15 year old honda civic or fit at a private sale. It's the cheapest vehicle I've ever owned.


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