The Real Cost of Owning a Car

So, you just bought a new car from the dealership, and you’re all excited. You’ve only spent a couple months of your real job’s salary for your sweet neon green hatchback.You even negotiated with the dealer to get a CD player installed. You’ve signed all the papers, crossed all the t’s and dotted the i’s, and it’s all yours. Sadly, the cost of your sweet set of wheels is not the only thing that you’ll be paying for when buying your first car. So buckle up and get that checkbook out as we discuss all that goes into buying a car.

Driver’s License

Hold on there speed racer! You better have a license to drive that car of yours. You get pulled over cruising down the highway without a license and you’re done for. Go to your local Department of Motor Vehicles and get your driver’s license. A class D license costs $28 in the state of Wisconsin.

License Plate

Hopefully you didn’t leave the DMV after getting your driver’s license. You still need to get your license plate. Much like a driver’s license, your license plate is the key to hitting the open road in your new pony. No license plate and you’re looking at a sizeable fine. The cost of getting your license plate initially is $75, and you’ll have to renew your plate annually. Yup, another fee.

Proof of Insurance

So you’ve got your car, license and registration, and a cop just pulled you over for failure to yield at a four way stop, (smart move). You hand the cop your license and registration. But wait! There’s more. The cop asks for your insurance, that’s the third piece of the puzzle to making your car street legal. You of course forgot to get auto insurance when you bought your car. Insurance ranges in price depending on a multitude of factors including: how many accidents you’ve been in, how long you’ve been driving, how many tickets you’ve gotten, and your age and occupation. Having a good and safe driving history can lower the cost of your insurance. The price that you’ll pay for insurance can also be affected by the level of coverage you choose. According to Value Penguin, the average cost of insurance in Wisconsin is $91 a month or just under $1,100 a year.


No one wants to call their parents, at midnight, telling them they ran out of gas two towns over and need a ride home. However, you forgot to fill up your gas tank. Gas prices change more often than the latest celebrity trends. That being said, according to the United States Energy Information Administration, U.S. households spent nearly 4% of pre-tax income on gasoline in 2012. Expect to shell out significant money for gas.

The Actual Car

When you buy or lease a car, the sticker price is not all that you’re paying. When you bought your car, you got the faux leather, rims on the tires, and power windows. All this can cost extra if you aren’t careful. Car dealers work on commission and if they can get you to get the custom flames on your hood, that’s a couple extra dollars in their pockets. Secondly, unless you paid in cash, you’ll be making monthly payments to pay off the cost of your car for years to come. Make sure you’re familiar with the interest rates and financing options available to you. The only thing more embarrassing than your 2012 Ford Fiesta with shocks, dice hanging from the mirror, and the back end completely covered in political bumper stickers is your 2012 Ford Fiesta with shocks, dice hanging from the mirror, and the back end completely covered in bumper stickers being repossessed because you couldn’t make the monthly payments.


Oil changes, tire rotations and other repairs is one other thing to consider when purchasing a vehicle. Repair costs are typically higher when buying an older vehicle than a newer one. According to Consumer Reports, around 4% of a yearly budget should go into maintenance and repair costs for a car.


Well you’ve had a good run with your car. However, it’s time to sell it and get that soccer-mom mini-van you’ve been eyeing. Unfortunately, the price you paid for the car is nowhere near what you’ll be getting back for it. From the moment you drive off the lot, your car loses value. This is called depreciation. According to Trusted Choice Insurance, the moment your car leaves the lot, you’ve already lost 11% of the value. By the end of three years, your car is worth only 54% of what you paid for it.

Putting it All Together

The real cost of owning a car is attributable to a multitude of factors, such as sticker price, insurance, gas, repairs, and deprecation. Before buying a car, it is best to do your homework and find out how much you’ll truly be spending.

This graph from Consumer Reports shows some of the costs of owning a car at various points of ownership.


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