How to Calculate Vehicle Cost of Ownership?


What Is the Total Cost of Owning a Vehicle?

Buying a vehicle is one of the biggest and most important purchases you will make. It’s important when you’re shopping that you choose a model that fits your budget. Of course, when it comes to car ownership, you need to consider the sticker price of the car and how much you will put down at the dealership. First and foremost, you must be comfortable with this cost. Before you come to the dealership, take a look at your finances to determine how much you can afford.

However, other factors go into the total cost of a vehicle. You must take into account all of these elements before buying a model. You don’t want to run into a situation in the future where owning the vehicle is too much for you to handle. If you are financing the vehicle, you’ll have a monthly payment to make. Other costs will come up throughout the year and while you drive the vehicle.

If you’re from Birmingham, AL, consult the expert and friendly team of Alfa Romeo of Birmingham. We can help you understand what else goes into the total cost of the vehicle and other expenses you’ll have to take care of.

Monthly Car Payment

It’s natural to first focus on how much the monthly car payment will cost you. Like many people in Birmingham, AL, you may not be in a position to pay for the car outright. You can finance the vehicle and pay for it over time. Most lenders will offer finance terms anywhere from three to seven years, depending on your credit history and situation.

Monthly payments will vary based on the total cost of the vehicle, your credit score, the interest rate of your loan, and how much you can put down. Based on the 3Q 2023 automotive finance report from the credit reporting agency Experian, the average monthly payment for a new car is $726.

Be mindful of how the term and interest rate affect the monthly payment. Longer terms will come with lower payments but higher interest rates, so you’ll pay more for the vehicle over time. Conversely, if you want to pay off the car faster, you can get a lower term, but this will make the monthly payments higher. You will save on interest payments, though, as the rates will be lower. It’s important to shop around for the best rates possible so you can save money on the life of the car loan.

Car Insurance

In Alabama, you are required to have auto insurance if you own and drive a vehicle. You must carry proof of this insurance in the vehicle with you. Insurance costs add to your financial responsibilities of owning a car. Most insurance providers have flexible options of allowing annual, monthly, or quarterly payments.

Carefully research different insurance companies to get the most favorable rate and comprehensive coverage possible. You should also look for discounts on multiple drivers, bundling with other plans, being a safe driver, and other items. If you have a good driving history, you can expect to pay less than if you have had moving violations and accidents.

Fuel

Before you purchase a vehicle, evaluate your driving habits to estimate how much you’ll spend on fuel. If you use your vehicle each day for commuting to work, you’ll probably spend more than if you drive less frequently and closer to home. The good news is that Alfa Romeo, like other vehicle brands, has electric options. The new Tonale is an all-electric model, so you won’t have to worry about spending money at the pump each month when you own and drive this car. If you do purchase a gas-powered vehicle, be wise about your driving habits and how much fuel you use from week to week and month to month, especially when prices are high.

Registration and Fees

Registration and initial purchasing fees are other things to be aware of when you come to the dealership to shop for a vehicle. In Alabama, the sales tax rate on a vehicle is 2%. You can calculate your car payment and purchase price by factoring in this rate at the time of purchase. Other fees include the registration fee, which is usually around $65 to $75 in Alabama.

Maintenance and Repairs

The vehicle maintenance cost is something everyone will need to remember. To keep your car running smoothly and safely, you’ll need to take good care of it. Putting off service and repairs will only lead to bigger problems down the road. According to the American Automobile Association, people spend about $800 a year or $66 a month on car maintenance. Setting aside this amount can help you stay on top of important services so your car lasts longer.

Find a Car You Can Afford at Alfa Romeo of Birmingham

Make sure you understand all the elements that go into the total cost of a vehicle before purchasing one. If you have a good grasp of these factors, you’re ready to come to Alfa Romeo of Birmingham in Birmingham, AL, and check out our inventory. Visit us today so we can help you get into the right model.

Alfa Romeo of Birmingham 33.521364, -86.659268.