When shopping for the perfect new car, there are a few ways to budget. A naive buyer may only consider the monthly payments. This strategy is bad for a number of reasons. Most importantly, thinking only about monthly payments makes it more likely you get locked into a long-term loan with payments that don’t keep up with depreciation. Slightly more shrewd buyers will consider the purchase price (the amount it would take to buy the vehicle outright with cash) plus the cost of borrowing (the amount of interest you’ll pay on your loan). The most savvy buyer will consider each of these things, but she’ll also consider the cost to own.
The Cost to Own
If you’re sticking to a budget, you should know exactly how much your car is costing you. Obviously, the first thing you’ll consider is your monthly payment, but that’s only one element. You should also consider insurance and registration, the cost of fuel, depreciation, and maintenance. Once you add all these costs together, you’ll have a better sense of how much it costs to own a vehicle.
This is the easiest part to calculate. Most dealerships advertise the monthly and biweekly payments up front. Just make sure that the number you’re given includes tax and you’re comfortable with the term of the loan. But you also need to make sure that the payment alone doesn’t exhaust your budget, because there are more expenses to consider.
Insurance and Registration
Saskatchewan has some of the highest insurance rates in Canada. Frequent accidents, thefts, and lawsuits significantly influence the price of insurance. In 2014, the average rate in Saskatchewan was $1,050 per annum or $88monthly. However, rates have climbed slightly for most vehicles in 2017.
Unlike other places, Saskatchewan does not consider your age and gender when determining your insurance rates. SGI does, however, consider your vehicle (it’s likelihood of being stolen, it’s overall value, et c…) and your safe driving record. So, if you drive a new, expensive vehicle and have a history of accidents or traffic violations, expect to pay more than the average.
Of course, you also need to calculate the cost of fuel. But that can be a little tricky because the amount you’re spending on gasoline (or diesel) depends on the price, which is volatile. It also depends on your driving habits and vehicle. If we take an average gas price $1.08, average yearly distance (15,000 kms), and average vehicle fuel economy (10.7L/100KM in 2015), we get $1,733.4.
Depreciation is a bit more difficult to fit into a monthly budget because it’s not a fixed cost. The rate of a depreciation is highest at the moment you take possession of your car, and decreases rapidly thereafter. But depreciation in the first three years of new vehicle ownership will cost you more than registration, insurance, gas, or repairs. So, it’s important to estimate the cost in your cost-to-own analysis
Maintenance also plays a part in your cost-to-own calculations. New vehicle warranties usually cover important powertrain issues, but you may be charged for other repairs. Oil changes and tire issues can add up if you don’t budget for them. Some experts say you should add $1,500 per car to your yearly budget for maintenance.
Cost to Own
A vehicle purchase is a major decision, and Capital GMC Buick Cadillac wants you to make the right one. And doing a cost-to-own calculation is a great way to make that easy. This handy tool from CAA will even do all of the math for you. Most importantly, being Canada’s #1 New and Used GM Retailer means that we have vehicles (and prices!) for everyone. Finding the perfect one is as easy as visiting our lot or browsing our inventory online.