How to not go broke buy­ing your first car

The Review - - AUTOMOTIVE - By Matt Jones

A dili­gent first-time car buyer will spend hours check­ing out com­pet­ing ve­hi­cles, test-driv­ing, and choos­ing must-have car fea­tures. Then comes the de­ci­sion to buy a new car or used one, or to lease.

In short, if you’re the typ­i­cal first-time car shop­per, you have a lot of re­search to do.

But many first-time buy­ers over­look what may be the most crit­i­cal part of car buy­ing: fac­tor­ing in the to­tal cost of the car.

Those costs blind­sided Justin Perez, a re­cent col­lege grad who lives in Boul­der, Colorado. He’d pur­chased his first used car and had done ev­ery­thing by the book: re­search­ing the ve­hi­cle, its his­tory and even the rep­u­ta­tion of the sell­ing dealer. Af­ter ne­go­ti­at­ing a sig­nif­i­cant dis­count on the price and mak­ing a siz­able down pay­ment, he ar­rived at a monthly pay­ment of $340. To him, that would be the bulk of his to­tal monthly spend­ing for the car.

But he didn’t ap­pre­ci­ate just how much car own­er­ship was go­ing to cost him. Be­tween the pay­ment and other car ex­penses, in­clud­ing an in­sur­ance bill that was steeper than he’d planned on, he was av­er­ag­ing nearly $700 per month.

“I ex­pected to pay some amount over the pay­ment, but I had no idea it was go­ing to be this much,” Perez said. He got a sec­ond job as a Lyft driver to make up the dif­fer­ence.

HOW MUCH DOES A CAR RE­ALLY COST?

To fully un­der­stand the costs of buy­ing a car, here’s a look at the monthly es­ti­mated fuel, up­keep, re­pair and in­sur­ance charges a driver can ex­pect to pay in the first three years of own­ing a Honda Ac­cord, a peren­nial top-seller.

Stan­dard taxes and fees are part of this equa­tion. We de­ter­mined these own­er­ship costs us­ing the Ed­munds True Cost to Own (TCO) tool. The prices for the used, new and leased Honda Ac­cord are based on Ed­munds’ anal­y­sis of 13,500 trans­ac­tions that took place over the sum­mer of 2018.

New: The av­er­age monthly pay­ment for a 2018 Honda Ac­cord pur­chased this sum­mer was $494. Once the own­er­ship ex­penses are in­cluded, that monthly tab in­creases to $728 over the as­sumed three­year pe­riod.

Used: The av­er­age trans­ac­tion price for a used 2015 Honda Ac­cord bought this sum­mer was about $16,300, with an av­er­age pay­ment of $340 per month. Add in all ex­pected op­er­at­ing costs, such as gas, in­sur­ance, rou­tine main­te­nance and re­pairs, and the monthly cost bal­loons to $670.

Leased: The cur­rent av­er­age monthly lease pay­ment for a 2018 Honda Ac­cord is $353. Bun­dle that pay­ment with the own­er­ship costs and the allin monthly cost is about $596.

It’s bad enough to con­front these ex­tra costs dur­ing car shop­ping.

It’s much worse if the re­al­iza­tion comes af­ter a car deal is done — and can’t be un­done. The fol­low­ing tips can spare you a bud­get scram­ble or even avert fi­nan­cial dis­as­ter if the car is ul­ti­mately too much to han­dle and your len­der re­pos­sesses it.

PLAN ON SPEND­ING TWICE YOUR MONTHLY PAY­MENT

If you’ve bud­geted $250 for the car pay­ment, plan in­stead on $500 to cover it and the own­er­ship costs.

This is cru­cial if you’re a young buyer fac­ing high in­sur­ance rates, if you’ve cho­sen a used ve­hi­cle that is out of war­ranty, or if you’ve se­lected a new or used car that gets poor gas mileage.

MAKE A CHECKLIST

For each car you’re con­sid­er­ing, an­swer these cost ques­tions:

Rou­tine main­te­nance: What kind of ser­vices will this ve­hi­cle re­quire? How often will they come up and what will they cost? You can often find the own­ers’ man­u­als on the car­mak­ers’ web­sites. They have sched­ules of rec­om­mended main­te­nance. Once you know what’s re­quired, call a few deal­er­ships or in­de­pen­dent car ser­vice cen­ters to get price es­ti­mates.

Sig­nif­i­cant ex­penses: How much will it cost to re­place a set of tires or brakes? What about other costly parts that might wear out?

Fuel costs: How many miles do you plan to drive, and how much will you have to spend on fuel monthly? Could your bud­get with­stand a spike in gas prices? Fu­ele­con­omy.gov has a fuel sav­ings cal­cu­la­tor that can help you plan for the long term.

In­sur­ance: Talk to an in­sur­ance agent or get a quote on­line. Be sure to ask about dis­counts for which you might qual­ify.

BE­WARE OF BUD­GET CREEP

It might seem that you could spare just a few more dol­lars each month for a car pay­ment, but re­sist the urge to stretch your bud­get.

Even with the best plan­ning, it can be hard to gauge just how much your car costs to run un­til you’ve lived with it for a while. Leave your­self some breath­ing room.

ED­MUNDS SAYS>> Sea­soned own­ers know that a car pay­ment is only the be­gin­ning of the over­all costs of ve­hi­cle own­er­ship. First-time buy­ers should re­search own­er­ship costs while shop­ping so they can make that first ve­hi­cle a dream car, not a night­mare on wheels.

This story was pro­vided to The As­so­ci­ated Press by the au­to­mo­tive web­site Ed­munds. Matt Jones is a se­nior con­sumer ad­vice ed­i­tor at Ed­munds. Twit­ter: @su­per­mat­tjones.

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