This summer, me and my friend Tudor did what I call a brief “over-a-cup-of-tea” analysis of the costs involved in owning a car. We were absolutely shocked by what we calculated, even with our rough estimates. It looked like a car was the largest financial black hole in any person’s life (at least until kids come along). I will now follow-up with a better estimate, if still not a very precise one. I will make an “optimistic” estimate and here’s what I mean by that: I will assume that an average person will use an almost new car for 10 years. The US average is about 12 years, but I find that … surprising to say the least, I was expecting more like 6. I will assume that proper maintenance is done (including washing), that no major damage to the car occurs and no major repairs, that taxes and insurance are paid as required by law. I will also occasionally round costs down excessively.

1) Buy car
I don’t know what a reasonably priced car is, but Top Gear’s current one is Kia Cee’d so I’ll take their opinion. The base price for it in the UK is 11,000 pounds, which is about 17-18,000 dollars. Because this is an optimistic estimate, I will assume you will only buy a lightly used car instead of a new car so I’ll shave 30% of the price, bringing the initial cost to about 12,000. I am assuming this has the sales tax included, otherwise add a rough $1,000 more.

2) Other fees when buying
Titling in DC seems to be about $26.
Excise tax in DC for this vehicle would be about 6% of the market value, so about $720.
New vehicle inspection fee an sticker in DC is $45
Tags are $10
Hope I didn’t miss anything, I never actually bought a car.

3) Gas
The Internet seems to put the average miles a person in the US drives a year in the 10,000 – 15,000 range. I’ll go with 10,000 (which by the way would mean 100,000 miles in total for those 10 years..we’ll use that later). The Kia Cee’d scores an awesome 67.3 – 40.0 mpg according to their website, so I’ll average that out and say it does about 55mpg (wow!). This implies about 180 gallons of fuel being burned in one year. I will take the average fuel price in the US right now to be around $2.8/gallon and considering that it seems to have doubled over the past 10 years, I will estimate the average gas price in the US over next 10 years to be $4.06/gallon. So the average yearly gas cost is about… $730. Again, keep in mind the awesome mileage on the Kia, the low price of gas in the US (when compared to most other countries), as well as the presumption that gas prices will continue to increase at the same rate.

4) Vehicle registration renewal
In DC this is about $72/year.
Reinspection is $35 every 2 years.

5) Insurance
According to www.carinsurance.com, the national average in 2010 is $1,546 (I find this optimistic, but then again that’s probably because the DC one is a lot more: $2,293). I found it really hard to get another estimate for insurance without filling out tons of forms with personal data, so I’ll go with $1,500 unless anyone can help me make this more accurate.

6) Washing
In my experience the average car-wash price so that you actually end up with a fairly clean vehicle is about $20. In my opinion you should do this at least monthly. I also think you should do a detailing job on it at the very least once every two years, preferably once a year, but I will leave that out since this is an optimistic estimate and just pray that you do it twice in those 10 years you have the car. Using averages and experience, that would be about $150 each if you’re lucky.

7) Maintenance
Say you change your oil every 5000 miles. That’s 20 oil changes and about $20 each so $400.

I’ve heard legends of tires taking people 80k mile, but I haven’t yet encountered anyone in that happy scenario. I’ll say 50k miles is as optimistic as I can be (around 30k is what I really think it accurate). So you will have to replace your tires at least once, assuming you will not use winter and summer tires. I’ll say that $200 should get you something decent.

You will need to check your car at least yearly, some adjustments and minimal repairs will be necessary on ANY car. You will need washer fluid, filters changed, you will probably change your battery at least once in this interval of time (two or three times is more likely even with good batteries), some engine and transmission tune-up, wheel alignment and rotation etc.etc.etc. I will estimate this to be very roughly $250 a year, averaged over the course of 10 years. I really just threw that there, I think it could easily be double that, but let’s again say you’re lucky and you own the most awesome car in the world.

TOTAL
Others things to consider: note that I am assuming: no serious accidents, no fines whatsoever, no parking fees, no serious repairs needed. I am assuming your stereo won’t die, you won’t EVER get a flat tire, your friend is not going to spill coke all over your seat, no one is ever going to steal anything from your car (or your car for that matter) aaaaaand all this good stuff.

Let’s draw the line and add things up.

12,000 + (26+720+45+10) + 730*10 + 72*10 + 35 * 5 + 1,500 * 10 + 20*10*12 + 150 * 2 + 400 + 200 + 250 * 10 = 41 796, so in other words, a mind-boggling $4,000+ PER YEAR!

Again, this is under incredibly optimistic assumptions, omitting a lot of things and for a “normal” relatively cheap car. I believe that the realistic estimate is actually at least 50% more and probably up to double that amount. Nonetheless, note that even in this scenario, the initial cost of the car is just about a quarter of the total expense (take that out, and it would still cost you about $3,000 a year).

Aftermath
The floor is open for criticism, ideas, comments. I want this to be an optimistic, but not NAIVE estimate so if you feel I’ve really exaggerated on way or another, let me know and I will revise. I’m also a bit worried about the insurance estimate and I haven’t really subtracted a selling price which should lower the estimate slightly (but when I say $4000/year I am ignoring about $2000 out of the total which is probably about what you would get by selling a 10 year old average car).
I intentionally did not worry about inflation because the numbers should make sense now.

Other thoughts:
– you could pay less for the car, but make no mistake: the older it gets the more you spend in repairs; one way or another that money would still be spent
– you could get the minimum insurance necessary which I will guess is a lot less than my estimate, but then I would have to count in the possibility of paying more for accidents; I think it actually turns out uglier, just by probability and statistics
– you could repair the car by yourself, but that implies both time spent and previous knowledge so there is an implicit cost to that also; I also have a fairly low maintenance cost in there so I’m not sure how much cheaper you could get, unless you were a professional car mechanic with your own garage, in which case you are an obvious special case
– more expensive cars will not only bring up the initial buying price, but most of all the others from insurance and maintenance to washing and care

We could now discuss what $4,000 a year would get you in 10 years 🙂 Also, I’ll redo the estimate for owning a car in Romania if anyone helps me out with the numbers.

Reality check
Finally, I want to end by giving a real world example. While I made this estimate by speculation, googling and looking forward, someone I know made it by looking back and that’s a lot more precise. The website is in Romanian (though he lived in US at the time), but you should be able to understand it pretty well through Google Translate. Nonetheless, I’ll just skip forward to his conclusion: total cost over 6 years, $54,736 for an average of $8,265/year.

I hope this will be interesting and/or useful to someone out there. I was shocked at the time, I still find these numbers to be absolutely incredible.