Understanding Your Car’s Total Costs

When it comes to the cost of buying a vehicle, some models are more expensive than others, and we’re not talking about just the sticker price — there are also hidden costs that come with vehicle ownership. Outside of just the initial purchase price, things like depreciation, insurance, and annual maintenance all add into the total vehicle costs. Here are some key factors car buyers can use to calculate their car’s true cost.


Though your car may always be worth a million bucks to you, as it ages, the resale value decreases — sometimes significantly. This makes depreciation, or the value your car loses each year, a big cost factor when it comes time to sell it or trade it in. Depreciation averages about 48 percent of the total ownership costs over five years. If there is an oversupply of your car, it has limited appeal; or if there are rebates on similar new models, your new purchase may depreciate faster than other models.

Interest on Financing

Researching car financing options can pay off in the long run since most buyers opt for a 60-month loan. Credit unions offer car loans, which can have, on average, 1 to 2 percent lower interest rates than financing received from conventional banks. That lower percentage can go a long way in helping you save money on your monthly payment.

Fuel Costs

The sedan may win out over the SUV if you commute regularly or live in an area with higher gas prices. In the Phoenix metro area, the price of a gallon of gas in 2019 ranged from $2.37 in Gilbert to $2.60 in Scottsdale. Most fuel efficiency ratings are based on driving 15,000 miles a year.

Car Insurance

Sports cars can cost more to insure than other vehicle types, but insurance companies also figure in your age, gender, driving record, credit rating and even the city and state you live in to determine your premiums.

Maintenance and Repair Costs

Automobile websites make it easier to equate how much it costs to maintain and repair a BMW versus a Mercedes. Kelley Blue Book and Edmunds.com have cost comparison tools, in addition to expert reviews, which identify the cars that will have you putting your mechanic on speed dial. You can also look into extended warranties, but that will cost you more green.

Taxes and Registration Fees

Arizona‘s sales tax for cars is 5.6%. Some counties charge an additional percentage of tax, and still, select Arizona cities charge another tax on top of those two. Sales tax amounts are calculated based on the car’s value, so the more expensive the car, the more taxes you’ll owe. Arizonans also pay a title tax, plate transfer tax and a registration tax. If you’re in the market for an electric or hybrid car, there is good news; in Arizona, you are eligible for tax deductions for purchasing an EV or hybrid.

All six of these factors are things to consider when you are looking to purchase your next ride. Outside of the just the sticker price, these factors will help you understand how to budget for your purchase. Plus, by looking past the immediate expense and down the road five years, you can add up the ongoing costs of your dream car and determine if it’s truly a ride you can afford.

If you’ve done the research, then you’re ready to get preapproved for an auto loan. We can also help you refinance with low rates and great benefits!


The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.