How Much Will A New Vehicle Truly Cost?

When thinking about buying a new car, it’s easy to fall into the trap of only focusing on the sticker price. But purchasing a vehicle is a complex transaction, and there is a range of hidden fees everyone must take into account when determining the true cost of buying a new car. Moreover, the costs don't stop once you drive the car off the lot. Each month and year there are a variety of fees you must pay to keep the car in good order and street legal. So, before buying, make sure to factor in all of the costs associated with this type of purchase before deciding what your budget can accommodate. Let's start looking at them now.

Car Loan And The Interest

While some individuals can afford to buy their new car all at once, it is more common to take out a loan to pay for the car. Even if you pay some money down, it is important to look carefully at the details of the car loan and the interest the loan will accumulate over the years. Here is an example to help illustrate. Say you take out a twenty thousand dollar loan to pay for your new car. If the loan has an interest rate of eight percent and you take sixty months (five years) to pay back the loan, then you’ll be paying 405.53 dollars per month. By the end of the loan, you’ll wind up paying 4,331.62 dollars in interest on top of the original loan, totaling 24,331.62 dollars. To help cut down on interest over the life of the loan, try to shop around for the best interest rate possible. Also, make sure the loan does not come with unreasonable origination fees or processing fees that might add to the money you owe to the bank.

Continue reading to learn about maintenance and repair costs.