The REAL cost of Owning a Car

[lecale]

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[super807]

I think the article is trying to help us reflect upon the costs of owning vehicles, not necessarily to convince us to go without cars. Much of how our cities are built and our expectations for ease of access to things has moved the majority of Canadians towards car ownership. Even though I use the bus system to get to and from work, we are still a two car household, and given our family situation, I don't see that changing.

That said, I think the article should be helping us to think about how we own cars.

Many families choose to buy/lease/finance new vehicles every three to five years. That means they always have car payments. Forever.

Many teenagers and young adults think that a car is a necessity (when it is usually a want), and they have no understanding of the costs involved. Choosing to buy a car, be it new or used, can cause them to not be able to continue their post-secondary education, because they need to work more hours in order to pay for their car and they either don't have enough to pay for their education, or their education suffers because they spend so much time working that they don't have time for school. They don't understand that at all when they choose to buy, they just want the freedom to go where they want, when they want, like their parents do or like many of their friends do.

I shocked some of my extended family members this year when I told them that the next car we buy we will buy outright, we won't finance it. The concept of saving for a car beofre buying it was foreign to them. They thought that was only worthwhile if we were buying used. Afterall, they said, if you get 0% financing, there is no interest cost. But my point of view is different. I don't want to have a monthly car payment, which commits a portion of our income each month, for a specified period of time. If something changes in our financial situation, we can't make a change to the car payment, so we have less flexibility.

And do we need such big, expensive cars/SUVs/trucks? In many cases, no. Of course some people do, but not most people. But those more expensive vehicles are often what get purchased. Leading to larger monthly payments, higher insurance costs, and higher fuel costs.

If we take the time to reflect upon the true costs, we might still choose to own a car or cars, but we might make some different decisions in how we do that.

But in general, I think most Canadians don't truly think about the cost of things. If people did, there would be very little credit card debt. Because as soon as you don't pay off your credit card in full, every purchase you make on that card costs significantly more than the sticker price you think you paid. And people wouldn't borrow to do home renovations. Because while they might be okay with spending 25K on a kitchen reno, they might say "no way" to a 35K reno. But as they borrowed the money for the reno, their real cost is 35K by the time it is paid off. And the list goes on. But people don't want to know the true cost of things. They just want to have the stuff they want and they want to have it now. The concept of saving for things before getting them is becoming obsolete. That is why personal debt in Canada has grown to levels it has. It's not because of problems in the economy. For the most part, it is because of consumerism.

Sorry for the rant... didn't know it was going to go that way.

[kanewtz]

​You better sit down Kanewtz. . . I know people that pay up to 28%. . .

Yowzers! If you know people paying that much interest...let me know who they are and I will loan them money at 20% and save them 8%. Excellent way to make 20% return on my investment!!!

[MillieH]

Don't jump on that too quick... people who pay really high rates are ones no one really wants to loan their money too.. high risk of not getting it back..

We pay cash for our cars new from the dealer but we do it for convenience.. the cost of owning a car is expensive.. We usually drive it for 10 years, the insurance and expenses with regular checkups and the random thing needing fixing makes it a pricey luxury as its not something we don't need. I'm not able to take a bus but could certainly do a taxi a few times a week. Most of the time the car sits there. We only put 5-8k kms on a year..

Yowzers! If you know people paying that much interest...let me know who they are and I will loan them money at 20% and save them 8%. Excellent way to make 20% return on my investment!!!

[MortgageQueen]

Yowzers! If you know people paying that much interest...let me know who they are and I will loan them money at 20% and save them 8%. Excellent way to make 20% return on my investment!!!

Just as MillieH says. . .the rate goes with the risk. . .usually. Maybe you should get into 2nd mortgage lending Kanewtz.

[xox2010]

I'm young and have no regrets in buying a car. I paid cash for it (I'm shocked at the amount of people I know who have car payments), and I pay about $117 / month in car insurance. I've said this before, but our city has a horrible bus system - I have to go to work at 6am some days, and I doubt that the bus would be running at that time... a 10 min drive turns into a 30 min bus ride. I just don't have the patience for it.

[anisa]

Hubby and I share one car, because i cannot justify the cost of another car.

we were fortunate enough to have enough saved when we bought a 4 yr old Camry, and we paid cash. we were determined not to borrow money for the purchase of something that is simply meant to transport you.

my view is if you cannot afford to pay cash for the car you want, either save up some more money, or lower your standards, because in the end it isn't something that defines you. it's just gonna sit parked in the garage or in a parking lot most of the time.

i can't even begin to understand leasing a car for personal use. what a waste of money!

[alicia]

I bought a brand new car 7 years ago at 21. I intend to drive it for at least another 3 years, probably longer (I didn't NEED a car then, it was convenience, so it only has about 85000 km on it). We are now a one car family (two adults), and I don't see that changing any time too soon, mostly due to the cost of it.

Car Related Expenses per Month:
$350 - I don't have a car payment any more, but when I did
$75 - Car insurance (and this is low compared to many)
$180 - Gas Money
$75 - Put aside for maintenance (oil changes/registration/MVI, etc)
TOTAL = $680/month

Times that cost by two... there is no way I'd pay for two cars. Our current town has horrible public transit, so a car is really required, but as long as we can hold out as a one car family, we will. I cannot imagine that additional expense. And if we're used to it, we will just make do - that money will then go to savings rather than another piece of metal slowly rusting.