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You're in the process of buying a car, and you know the sticker price, but have you budgeted for the other costs that come with that initial payment as well as its maintenance? There are a lot of different expenses that come with owning a car, and it's a good idea to be familiar with all of them before your purchase. Here are the main costs to consider when you're budgeting for a car.

Upfront Costs of Buying a Car

  • Down Payment: The down payment is the portion of the car's price that you pay when you first buy the car. This is usually a fraction of the car's total price, and you'll pay the difference over time with monthly payments on your auto loan. You'll also pay interest on that loan, so making a higher down payment will save you money in interest down the road. To see how the size of the down payment affects your cost over time, try using a down payment calculator.
  • Sales Tax: The dealership will collect a sales tax on your car purchase — this is a small percentage of the price of the car.
  • Dealership Fees: Dealerships generally charge additional fees such as a documentation fee to cover the costs of paperwork and, if needed, a destination fee to pay for shipping the vehicle.
  • State Fees: Your state charges fees for obtaining a vehicle title and registering your vehicle. According to Consumer Reports, you can expect state fees to add up to about 1 to 3 percent of the price of your car.

Recurring Costs

  • Monthly payments: Your monthly payments are determined by the price of your car, the size of your down payment, and the interest rate. As Forbes reports, the average monthly payment on a new car was $515 a month for the fourth quarter of 2017.
  • Maintenance: Maintenance costs on a new car are usually fairly low. For example, NerdWallet notes that getting tires rotated costs between $20 and $50, and getting an oil and filter change costs between $20 and $55. However, after you've driven your car for tens of thousands of miles, you may have to replace some parts at a greater cost. You may pay $100 to $350 to replace brake pads or $50 to $300 to replace a tire.
  • Insurance: How much you end up paying for insurance depends on factors like your age, location, and driving record. USA Today reports that the average annual car insurance cost is $1,427 as of 2018.
  • Gas: Calculate your expected gas costs by tallying up the miles you plan to drive on an ordinary day and entering that information in the AAA Gas Cost Calculator. You'll also need to enter the make and model of your car because fuel efficiency varies between cars.
  • Parking: How much you'll spend on parking depends on where you live and whether you get parking benefits at work. To find typical parking costs for your city, try searching via an app like ParkMe.

Other Costs

As USA Today reports, the average cost of a car repair bill is $500 to $600. AAA recommends saving at least $50 a month in case your car needs some unexpected repairs.

While there's a lot more that goes into buying a car than the sticker price, with the right budget and planning you can be sure to drive your car off the lot with financial peace of mind.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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