New Car Ownership Keeps Getting More Expensive

Today’s Post by Joe Farace Photography

According to AAA, the finance costs on new car purchases jumped 24% in 2019, pushing the average annual cost of vehicle ownership to $9,282, or $773.50 a month. That’s the highest cost associated with new vehicle ownership since AAA started tracking expenses in 1950. It comes at a time when 72-month car loans have become common, meaning car buyers are paying more and longer for vehicles that lose value the moment they’re sold.

The new figures come from Your Driving Costs, which reviews 45 models in nine categories to determine the average annual operating and ownership costs. Depreciation remains the single biggest cost, accounting for more than a third (36%) of the average annual cost. It slowed this year, with vehicles losing an average of $3,334 a year, up $45 or 1.4% from last year. In 2018, depreciation rose by $117 or 3.7%. In two classes—small and medium sedans, cars that manufacturers have all but stopped making—depreciation costs declined.

Other key findings of this year’s Your Driving Costs include:

  • Average fuel cost rose to 11.6 cents per mile, 5% higher than last year.
  • Average maintenance and repair costs climbed to 8.94 cents per mile, up 8.9% over last year. Electric vehicles had the lowest maintenance and repair costs, only 6.6 cents per mile, while medium-sized SUVs had the highest at 9.6 cents per mile.
  • The cost of licenses, registration fees and taxes rose $14 to $753 per year, an increase of 1.9%

Here are some new car buying tips from AAA:

  • Know what you can afford to spend before going to a dealership.
  • Minimize finance costs by getting the shortest loan term you can afford.
  • The best times to buy tend to be the last two weeks of December when dealers are trying to hit year-end goals and, to a lesser extent, between July and October.
  • The best time to buy is the end of the month because sales managers like to build campaigns around monthly quotas.
  • Consider a late-model, gently used vehicle. New cars lose 20% of their value the moment they leave the lot, so you can save if you look for a car that’s a year or two old. Your insurance costs could be less, too.

If you’re wondering why there’s a photograph of a Dodge Challenger in today’s post it is because Mary has decided that my next JoeCar should be one of them. Now I haven’t owned an American car since my beloved 1984 Jeep Wagoneer Limited and haven’t owned a Chrysler product—my Jeep was an AMC—since a 1965 Plymouth Barracuda. As they say, we’ll see…