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Last June, Mrs. Groovy and I got a new-to-us car, a 2016 Honda CRV for $21,035.91. We christened our new Honda, “Penny,” and she came to us with 32,635 miles on her odometer.
Now, because I run a personal finance blog, I decided to follow the prescribed maintenance schedule of the manufacturer to the tee. I figured this would be a great case study on how truly expensive it is to own an automobile.
My first maintenance milestone was at 37,500 miles. At this point, Honda wanted me to change the oil and rotate the tires. The cost of this prescribed maintenance was $78.02.
The next maintenance milestone was at 45,000 miles. At this point, Honda wanted me to change the oil and rotate the tires—and replace the oil filter, the coolant, and the brake fluid. The cost of this prescribed maintenance was $306.48.
Yes, owning a car isn’t easy on the wallet. Here’s what it cost to own Lucy (our 2004 Camary) from 2015 to the time we traded her in for Penny.
| Year | Gas | Inspection | Registration | Insurance | Maintenance | Repairs | Taxes | Depreciation | Total Annual Cost | Average Monthly Cost |
|---|---|---|---|---|---|---|---|---|---|---|
| 2015 | $634.91 | $30.00 | $27.96 | $452.71 | $759.24 | $169.85 | $51.27 | $1,209.36 | $3,335.30 | $277.94 |
| 2016 | $516.41 | $30.00 | $33.03 | $469.51 | $340.80 | $0.00 | $50.10 | $1,209.36 | $2,649.21 | $220.77 |
| 2017 | $842.86 | $30.00 | $36.00 | $510.25 | $253.26 | $1,514.47 | $44.25 | $1,209.36 | $4,440.45 | $370.04 |
| 2018 | $1,592.71 | $30.00 | $39.75 | $476.18 | $179.86 | $0.00 | $44.16 | $1,209.36 | $3,572.02 | $297.67 |
| 2019 | $428.64 | $12.50 | $21.25 | $158.90 | $97.22 | $0.00 | $23.35 | $503.90 | $1,245.76 | $249.15 |
The average monthly cost of owning Lucy over the above time frame comes to $283.11. And it’s important to note that we bought Lucy used, for cash. Had we bought Lucy new and financed her, the monthly cost would have been much higher. We would have faced finance charges and higher depreciation costs, higher insurance bills, higher registration fees, and higher automobile taxes (there’s a property tax on cars here in North Carolina). And then, of course, there’s the opportunity cost of buying new. By buying used, we easily saved $7,000. Seven thousand dollars invested at seven percent over ten years turns into $13,000. That’s a lot of money to walk away from, especially if you happen to have a modest income.
Here’s the cost of owning Penny thus far.
| Year | Gas | Inspection | Registration | Insurance | Maintenance | Repairs | Taxes | Depreciation | Total Annual Cost | Average Monthly Cost |
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | $919.42 | $81.80 | $24.75 | $312.31 | $78.02 | $0.00 | $77.29 | $1,027.25 | $2,520.84 | $360.12 |
| 2020 | $188.81 | $5.00 | $6.00 | $91.18 | $306.48 | $0.00 | $31.64 | $293.50 | $922.61 | $461.31 |
When I look at these numbers, I understand why Mr. Money Mustache hates cars. I also understand why Dave Ramsey says you shouldn’t buy a new car unless you have a net worth of at least a million dollars.
Final Thoughts
I knew owning a car was a costly proposition, but I had no idea it was this costly. Mrs. Groovy and I bought Penny used and we did so without financing. And, yet, Penny—our middle-of-the-road SUV—is still costing us $382 per month. Ouch.
Okay, groovy freedomist, that’s all I got. What say you? I say cars are a pox on one’s wallet and should rarely if ever be financed. But maybe you find my position on car ownership a little overwrought. Let me know what you think when you get a chance. Peace.
Yeah, most people forget its not the price of the car they should consider its also the monthly and annual cost they bring… thanks for the detailed chart 🙂
Yikes! Those are scary numbers, although not surprising to my trained eye 🙂 .
More people should do this kind of math before they splurge on their new $40k pickup truck or SUV.
We bought an 8 year old Prius last year for $10k and people were asking us why we didn’t get something fancy and new, being financially independent and all. They sort of answered their own question. But it’s still a costly proposition. Between new tires, registration, insurance and a few minor repairs and maintenance, our 2019 cost was a little over $200 per month, not counting the purchase price. And only $200 was gas for the entire year.
Speaking of tires: when I bought my Lincoln last year I noticed a slow leak in one tire, but waited until last month to do something about it. Asked the dealer to look into it when I got my free oil change, they said they found a small nail, but couldn’t fix it. But after some to and fro they said they’d sell me new tires (yes, i need all four) for $1000. I said I’ll think about it and then went to the muffler joint who does the oil changes normally. Said there was a slow leak and can they fix it (made no mention of my dealership visit). They came back a few minutes later saying the tire was fixed and it’d cost me $10.
You really have to shop around and take what the mechanic says with a grain of salt. (I’m sure the tread on the extant tires isn’t as deep as a new set, but I’d prefer to buy new at a time of my choosing.) When a mechanic says, “I can’t fix this,” it may just mean, “I don’t want to spend time on a small job when I can up-sell you on something bigger instead.” Shop accordingly.
steve poling recently posted…Dave Ramsey Heresy
Ah, the perils of asymmetric knowledge and crooked mechanics. I have a few similar stories. When it comes to car repairs, especially costly ones, it pays to go Ronald Reagan: “Trust, but verify.”
Man, I am so rooting for Tesla to mainstream electric cars. No “Johnson rods” to deal with and no smelly gas stations to deal with. Just top off the battery every night or every other night.
We have three cars, two bought used with cash, one bought new with cash. I think maybe you need several million invested before buying a new car makes sense. My wife will probably buy new or only slightly used next time, I just buy very used for me. But money isn’t a factor for us when it comes to cars.
Couldn’t agree more. New cars are really a rich person’s game.
dude, if you can’t afford to pay cash for a new(ish) car, you can’t afford a new(ish) car.
(But steve, you blew a cylinder on route to chicago just a month or two after the car went out of warranty. — Yeah, suck it up, buttercup.)
steve poling recently posted…Dave Ramsey Heresy
The buttercups of the world have to rough. And it’s mainly because of their own doing. Become a slave to conventionality (and your impulses) and you will never know financial security.
Wow, I’m impressed with the level of detail you track, Mr. G. I had a much simpler metric for decades, which was this: “Drive a car for <$1k/yr of depreciation".
A quick example: I accomplished it with my 2001 Miata, which I bought in 2005 for $18k and sold in 2012 for $12k. $6k depreciation over 7 years, so I made my goal.
Not as comprehensive as your approach, but it provided strong motivation for buying them a few years old (for cash) and driving them a long time. Cars are tough to live without, best to find something to challenge yourself to keep your costs as low as possible.
I’m equally impressed, my friend. Shoot for an annual depreciation of a thousand dollars or less is brilliant. It forces you to be really thoughtful when it comes to buying and maintaining a car. I got to think about this some more. Bravo, Fritz. You have a knack for making me see the world differently.
How are you calculating depreciation?
I thought those numbers would be higher.
Interesting when you see the figures all laid out. Cars are not cheap. However, they sure are handy.
Hey, SFM. Here’s how I calculated the depreciation for the Camary. We owned it for 129 months. We bought it for $14,500 and got $1,500 for it at trade in. $13,000 divided by 129 comes to $100.78. I then made the same assumptions for my CRV. Own it for 129 months, get 10 percent of the initial cost at trade in. $21,036 minus $2,104 equals $18,932. $18,932 divided by 129 equals $146.76.
If you learned how to do the maintenance yourself, you’d save money. All of the items you’ve had done are easy, except for changing the brake fluid.
Example: 5 quarts synthetic oil on sale at Costco = $16
Top of the line Mobil One oil filter at Amazon = $12.28 or:
Mid-tier Purolator oil filter = $7
There are now YouTube videos that show you how to do almost any auto maintenance.
Excellent point, JD. Armed with a little pluck and YouTube, most people can manage most maintenance requirements on most cars. Perhaps it’s time to up my car ownership game!
Spot on blog – the more that I read about personal finance, the more that I realize how some of the very large financial events are so impactful. Transportation is certainly one of those impactful events.
For the last many years we have always bought brand new, modestly priced cars. We have always shunned super expensive cars even though they are all around us (friends who do not focus on FIRE).
We currently drive a 2011 Toyota Corolla and a 2011 Toyota RAV4 that we bought new. We will likely drive these until they implode so I am guessing 200K+ miles (a bit over half way there now).
I am seriously, for the 1st time in my life, considering buying a $5K used car for me next go round. Coupled with a new car for my wife, that seems like a reasonable compromise. Not sure if everyone would agree but those are my current thoughts.
I love your style, TC. Cars are a major money suck. But you’ve played this necessary evil as well as anyone. Buy a modest car (new or used) and drive it till it “implodes.” And I couldn’t agree more with your chivalry. The wife gets the super dependable car and the husband gets the adventure car. Bravo, my friend.