Gasoline prices are rising again, but fuel is just one factor in the high cost of driving an auto. According to AAA, you can drive a small sedan 15,000 miles a year for 41 cents per mile. You'll spend 66 cents a mile, or $3,750 more a year, to put 15,000 miles on a four-wheel-drive.
Many factors feed the cost of driving: financing, depreciation, maintenance, insurance, and driving habits.
Financing: Credit unions often offer the best rates on loans, but you also should compare the loan term, fees, and prepayment penalties. If the dealer offers a rebate, you may save more money by taking the rebate and financing at Bear Paw Credit Union than taking the low-rate loan.
Depreciation: Depreciation is usually the largest part of the cost of driving: AAA estimates the average annual depreciation on a sedan driven 15,000 miles per year at $3,392. Kelley Blue Book says that after five years, the average car is worth 35% of its sticker price. But some cars, especially Honda and Acura, have much lower depreciation. Ignoring the current value of a used car can put you "upside-down" if you trade the car and pay off the loan: You owe more on the car than it's worth.
Maintenance and repair: AAA estimates the maintenance costs of sedans at about five cents per mile, which is—surprise—about half of the gasoline cost per mile.
Insurance: AAA estimates insurance expense for the average sedan at $985 per year, which would cover a 47-year-old male driver with a good record, and a short commute. Insurance for drivers who are male, younger than age 25, poor students, or have a record of moving violations and/or accidents is more expensive. Raising the deductible and reducing the maximum coverage can lower premiums but will increase your risk.
Driving habits:
- Drive defensively. Try to stay off the road late at night when most accidents occur.
- Keep tires inflated to improve mileage and cut the chance of a blowout.
- Drive mild, not wild: Accelerating slowly and coasting up to stoplights can improve gas mileage up to 30%.
- Use the cruise control to save 4% to 14% in gas.
- Drive less to save on gas, oil, maintenance, and deprecation.
- Drive less: Think about carpooling, taking public transit, biking, or walking.
- Bear Paw Credit Union can help with all your auto needs. Contact us today at 265-9626.
How to Cut the Cost of Driving
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