Some of us are drawn by the promise of better MPG’s. While others have realized that the black cloud of exhaust spewing out of your tail pipe is why your kids ask to be dropped off at the end of the block. Whatever the reason may be, you’ve finally decide it’s time to ditch your clunker and for a new ride. But when it comes to finding the best deal, low sticker prices, affordable financing options, and cash back guarantees are just the beginning of the story. You need to consider the Total Cost of Ownership.
Kelley’s Blue Book, the folks that tell you how much your car is worth, has put together a formula that calculates how much it costs to keep you car on the road for the 5 years following your purchase. This is called the Total Cost of Ownership and should be considered an important factor when deciding which car really has the best deal.
Kelley’s Blue Book defines these elements as:
- Insurance- Insurance costs assume a driver with a clean record, using the vehicle for personal use. Quoted coverage includes liability, physical damage protection and (where applicable) personal injury, based on the most-often-selected limits and deductibles.
- Depreciation- Derived from Kelley Blue Book’s residual values and updated every 60 days, depreciation represents the decrease in the vehicle’s value based on Fair Purchase Price (or MSRP if the Fair Purchase Price is unavailable), economic factors and historical data.
- Repairs- Repairs are based on the retail price of a zero-deductible extended-warranty service contract that covers the vehicle for its initial five-year term of ownership.
- Maintenance- Maintenance includes the costs of following the manufacturer’s recommended service schedule. This amount is based on national average labor costs of $84 per hour, plus replacement parts and service items purchased at the manufacturer’s suggested list prices.
- State Fees- State Fees include title and registration fees based on an average of new-car retail sales in all states, the vehicle’s Fair Purchase Price (or MSRP if Fair Purchase Price is unavailable) and an average state sales tax of 6.27 percent.
- Financing- Financing assumes a buyer with Tier I or II credit, a loan APR of 3.99% and 10% down payment based on Fair Purchase Price (or MSRP if Fair Purchase Price is unavailable) without any rebates or incentives.
- Fuel- Fuel Costs are calculated using U.S. EPA mileage data for each make, model and style, reflecting 45% highway driving and 55% city driving. Kelley Blue Book updates these costs every 60 days based on actual and forecasted fuel costs.
They allow you to compare up to 5 cars and you click on “see breakdown” under the cars graph for specific details. You’ll find that Insurance can be a significant expense in the total cost of ownership. Public can help you keep those costs to a minimum. Get a Quote from Public then head over to Kelley’s Blue Book to see how our quote and your car stack up.