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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.
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