In the market for a new car? Calculate the full costs

If you’re in the market for a new car over the coming year, there’s a lot more to think about in terms of cost than just the sticker price. If you aren’t figuring in the associated financing costs, taxes, insurance, depreciation, gas and maintenance, you are only getting a partial picture of the true cost to drive a car. According to AAA, the cost of car ownership in 2019 was $9,282 or $773.50 a month. That’s 5% more – or $433 – than the prior year.

One of the key culprits to the costs? Finance charges, which AAA says average about 40% of the total costs.

“A key contributor to the increase was a large jump in financing costs. Rising federal interest rates and higher vehicle prices fueled a spike in finance charges, which rose 24% in 2019 from $744 to $920. It comes as long-term loans are becoming more common. Such loans offer lower monthly payments, but they ultimately cost the consumer more, meaning car buyers are paying more, and longer, for vehicles that lose value the moment they’re sold.”

Although long-term loans might seem cheaper, AAA says that they are ultimately costing the consumer more. They estimate that, on average, every 12 months added to the life of a loan adds nearly $1,000 in total finance charges.

One other key expense factor is that as new cars come equipped with more technology to make driving safer and more convenient, maintenance and repair costs go up. Sophisticated sensor in bumpers mean that a simple fender bender can require a costly replacement and recalibration of sensors. See our prior post on high tech cars equaling high cost repairs.

Because cars can be such a big budget item, it can pay to do advance research to ensure you make the best purchase and consider other factors than just the sticker price. Here are some car-buying tools to help you anticipate and calculate the total cost of ownership of various makes and models.

  • The Edmunds Inc. True Cost to Own tool calculates additional costs you may not have included when considering your next vehicle purchase. These extra costs include depreciation, interest on your loan, taxes and fees, insurance premiums, fuel costs, maintenance, and repairs.
  • Kelley Blue Book offers the 2019 Best Resale Value Awards and tools to check your car’s value.
  • Top Safety Picks are issued annually by the Insurance Institute for Highway Safety (IIHS). Also see the IIHS report on insurance losses by make and model.
  • Car Fax VIN Check  is an essential tool to check the Vehicle Identification Number on used vehicles before purchase.
  • Edmunds and Consumer Reports  track the most fuel-efficient vehicles.

Talk to your insurance agent!

One other source for keeping annual costs of a new car down is to talk over auto insurance options with your insurance agent.  Be sure you are taking advantage of any available discounts, such as discounts for safe drivers, low mileage, seniors, good students, and more. Plus, bundling your auto and homeowners policies with one insurer can yield discounts on both.

Reprinted from Renaissance Alliance – no usage without permission.

Precious cargo: How to buy, install, and register child car safety seats

Car crashes are the leading cause of death for US children aged 3 to 14, yet many of those deaths may be preventable with the proper use of car safety seats. A 2017 study by the CDC published in The Journal of Pediatrics showed that 20% of children who were in a car crash where someone died were not buckled in properly or were not wearing a seat belt at all, as were 43% of children who died themselves.

Buying a child safety or booster seat for your car shouldn’t be a quick or easy purchase if you want to ensure your child’s safety. Do you know the various types of seats and which is appropriate when? Are you choosing the right seat for your child and your vehicle? Is the seat properly installed and is your child properly secured? Do you know when to change/upgrade the seat as your child grows? The Mayo Clinic lists 9 common mistakes parents make when installing and using car seats.

First, know your state law. The Governors Highway Safety Association says that all states and territories require child safety seats for infants and children fitting specific criteria, but requirements vary based on age, weight and height. Often, this happens in three stages: infants use rear-facing infant seats; toddlers use forward-facing child safety seats; and older children use booster seats. They offer an overview of state laws.

For help in buying and installing the right seat, we offer several dependable sources you can turn to for research:

The National Highway Traffic Safety Foundation has a great car seat and booster seat guide with various tools to guide you through every stage. A few of the handy tools they offer include:

Safe Kids Worldwide offers the ultimate Car Seat Guide , which offers practical tips to keep kids safe in cars from buying, installing, ensuring a safe fit, and when you should change the seat as your child ages. If you need help installing your car seat or would like a checkup to ensure that it is installed properly, Safe Kids coalitions have car seat checkup events and inspection stations around the country. If there isn’t an event near you, you can search for a certified child passenger safety technician (CPST) who can help you.

Consumer Reports also offers excellent Child Car Seat Ratings and Buying Guide, including the video below.

Wirecutter (from the New York Times) also offers consumer shopping guides to find the Best Infant Car Seat and the Best Booster Car Seats. 

Reprinted from Renaissance Alliance – no usage without permission.

Do traffic tickets jack up your car insurance rates? You bet they do!

Nobody wants to pay more than they must for auto insurance, but  when bad or risky driving leads to tickets, it can add big bucks to the amount you pay for insurance over several years. Danielle Ling has a story in PropertyCasualty360 about which moving violations raise your car insurance rates the most. Note that these are averages – in some states and with some insurers, costs can be much higher. And these are just the costliest violations. Ling says that even lesser offenses like speeding in a school zone can increase annual rates by more than $300.

Here are some of the costliest violations and the average annual increase

  • Hit & Run – $1,212
  • Racing – $1131
  • DUI – $1100
  • Refusing a breathalyzer – $1080
  • Driving with a suspended license – $1044
  • Reckless driving – $1,038

We’ve written about DUI violations in more detail – a highly dangerous behavior that can be very expensive:

Most states require you to report your DUI to your insurer. A DUI is considered a major violation, like reckless driving or hit-and-run. You will be required to get what’s called an SR-22, a form filed on your behalf by your insurance company which constitutes proof that you are carrying the required amount of liability insurance. It’s also a red flag that you are a high-risk driver. (In Virginia and Florida, the required form is called an FR-44.) There will be a filing fee, usually between $20-$50. Not all insurance companies will file an SR-22. Some insurance companies will not insure high risk drivers, so if yours does not file, you will likely need a new policy with a company that will file the form.

 

Depending on the state in which you live, you will be required to carry SR-22 insurance for three to five years.

After filing an SR-22, brace yourself: your insurance rates are going up. A recent study showed that on average insurance rates increased by more than 56% – a $1000 yearly rate would become $1560 after a first DUI offense.

 

In addition to requiring an SR-22, you may also be required to install (at your expense) an ignition interlock device. The cost to install these devices varies by jurisdiction, but is usually around $175-$300. These devices are basically breathalyzers attached to your vehicle’s starter. They won’t let the car start if they detect alcohol on your breath (the base limit of alcohol allowed varies between jurisdictions, but is almost always “none”). Also, at random times while the vehicle is in motion, the system will require another puff into the analyzer. This “rolling retest” is designed to prevent non-drivers from providing a breath sample and to prevent consumption of alcohol behind the wheel.

See more at our post: DUI Laws, Insurance Rates, and Interlock Devices

Good drivers may be eligible for discounts

It’s important to know that while risky and dangerous driving costs money on your insurance and may even risk suspension or termination of your driving privileges, safe driving can save you money.

Some states and some insurers offer discounts for safe driving or for driver training. In fact, there are a variety of discounts available for other reasons, too, although they vary by state and by insurer. We’ve rounded up many of the most common discounts – see our post Don’t leave money on the table : Talk to your agent about auto insurance discounts.

Reprinted from Renaissance Alliance – no usage without permission.

 

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