How Much Does It Really Cost to Own a Car?

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The allure of the open road and freedom that comes with owning a set of wheels is a dream come true for many people. Cars aren’t just a mode of transportation—they’re often an extension of our personalities and lifestyles. 

However, car ownership is a significant financial commitment that goes far beyond the initial price tag. Many people often underestimate the true cost of owning a car, leading to unexpected expenses down the proverbial (and literal) road. 

Buckle up as we dive deep into the costs of owning a car. This comprehensive guide will allow you to make a smarter buying decision and score the best car deal in the Greater Richmond (VA) area.

How Much Car Can I Afford Based on Salary?

So, you’re ready to make a vehicle purchase? Great! Narrowed down the make and model that’s perfect for your needs? Awesome. Only one thing is left to determine—can you afford a new car right now? Let’s find out!

If you’re wondering, “How much does it cost to own a car,” the short answer is that it can vary. An essential first step is asking yourself how the monthly payment will fit your budget. Consider the following budgeting tips as you shop for your next vehicle. 

The 20/4/10 Rule

So, you’re revved up and ready to buy, but how do you determine how much to spend on a car? That’s where the 20/4/10 rule comes into play. This nifty guideline is like the trusty GPS that prevents you from making a wrong turn on your car-buying journey.

It suggests that you should:

  • Put down at least 20% of the car’s price as a down payment (20 down payment)
  • Finance the car for no more than 4 years
  • Ensure that your total monthly car expenses (including insurance) don’t exceed 10% of your gross income. 

By sticking to the 20/4/10 rule, you’re setting yourself up for a more manageable and financially responsible car ownership experience. It acts as a guardrail to keep you from veering into the danger zone of overwhelming debt and regret.

Consider the Overall Cost of Ownership

Your monthly car payment is likely the first consideration you will want to work through. As you begin to crunch those numbers, it’s essential to factor in all the other costs of vehicle ownership.

Auto insurance, routine maintenance, and fuel prices can significantly impact your monthly budget. Many of these hidden ownership costs can quietly add up.


Consider the kind of fuel your car needs and how often you’ll need to refuel when planning your budget. For example, many new cars require premium gasoline to run correctly, which is more expensive than mid-grade or regular. 

You’ll have to fill your vehicle more often if you drive a lot daily or go on frequent road trips. Therefore, hybrid or electric vehicles could be a more budget-friendly option in this regard. However, you’ll need the ability to plug in your car nightly so keep in mind that if you live in an apartment, many buildings don’t offer this feature.


Car insurance is not one-size-fits-all. There can be lots to consider when deciding what type of coverage is right for you and your budget. Insurance companies will look at the following when providing you with a quote:

  • Driving record
  • Physical address (certain areas cost more to insure)
  • Monthly income
  • Vehicle make and model
  • Credit history 

The finance company may require you to maintain full coverage on the car until you pay off the loan. This protects their investment, as they technically own the vehicle until you’ve fully repaid it. Remember that full coverage insurance is often more expensive than a basic policy.

Researching and comparing car insurance options is especially important for those in the Greater Richmond, VA, area. The area has a mix of urban and suburban roads, and understanding the specific conditions and requirements will help you select the most appropriate coverage.

Maintenance and Repairs

Maintenance is a primary factor that plays a crucial role in determining the cost of owning a car. 

For example, most mechanics recommend changing the oil every 3,000 to 5,000 miles. An oil change can be more expensive if your vehicle requires synthetic oil to run correctly.

It’s also a good practice to treat your vehicle to a car wash now and then. It prevents long-term damage to the paint, clear coat, and undercarriage from elements like salt and dirt.

You’ll eventually need a set of new tires that can cost $600 or more. If you live in a wintry climate, you might want to consider investing in snow tires to keep you safe on icy roads. Once winter is over, you’ll need to pay a tire shop to reinstall your summer tires. 

Tires are just one part of the bigger picture, though. You will eventually have to replace your brakes, windshield wipers, and battery as well. Plus you should factor in unexpected repairs,  especially for used cars. For example, replacing your alternator or starter can run upwards of $600+, depending on the make and model.

Hidden Costs

Car ownership comes with many hidden costs that can catch you off guard if you’re unprepared. A collection of not-so-obvious expenses can nibble away at your budget beyond the initial price tag, fuel, registration fees, and maintenance.

Take parking, for instance. Will you need to purchase a parking permit for your residence or workplace? This can be a substantial recurring expense, especially in urban areas. And speaking of commuting, are there tolls on your regular route?

Car Ownership as an Opportunity Cost

Having an active car loan means you won’t be able to spend that money on something else. If you’re about to finish paying off your car, now’s a good time to consider how to use the extra cash. For example, you could use it to pay down high-interest debt, boost your savings, or set it aside for a large purchase.

Research Before You Buy

When buying a car, knowledge is power, and thorough research is your best ally. What does car review websites have to say about the make and model you’re considering? 

Or, consider joining an online car forum to learn more about owner experiences. For example, a particular year model may have an inherent transmission design flaw. Car owners will often post their experiences online. Reading these reviews will allow you to avoid a model with known issues and save money in the long run.

Are you enamored by the grandeur of a large vehicle like a truck or a family-sized SUV? While they offer ample space and often come with many features, it’s vital to consider their insatiable appetite for fuel. Larger vehicles typically have lower fuel efficiency, which means more frequent trips to the gas station. 

If luxury is what you’re after, research the maintenance average costs for that specific make and model. Luxury vehicles often come with luxury price tags, not just at purchase but also when it comes to maintenance. Oil changes, parts, and routine repairs for luxury cars can be significantly pricier than for their non-luxury counterparts.

Financing Factors & Considerations

Rate & Term

The length of your car loan and the interest rate mainly decide how much you’ll pay each month. Longer loan terms often come with higher interest rates. While many of us may prioritize a lower rate, others approach car buying with a monthly payment figure in mind.

Credit Score

Your credit score is another critical component that decides your interest rate and the total cost of your new vehicle loan. Ensuring your credit is in great shape before applying could save you a lot of money in interest throughout your loan.

Additional Costs & Coverage

Extra costs like GAP insurance, warranties, or leftover loan balances can affect your monthly car loan repayment. Shopping around for these extras (or considering a down payment towards them) can save money in the long run. 

A car affordability calculator is a tool to help you understand what you can spend. Calculating how much car you can afford will give you a clearer picture of your budget and allow you to negotiate confidently with the dealer.

Get Pre-Approved

Getting pre-approved for a loan is a great way to prepare for your vehicle purchase. To get started, you’ll first need to join Call Federal Credit Union. Once pre-approved, you’ll have real numbers to work with and greater negotiating power at the dealership. 

With our Check-In-Hand loans, we’ll deliver the actual loan check to your desk or door. We make applying easy, too—simply call or visit your local branch or apply online.

Determine the Total Purchase Price

The final thing to consider is the total cost, which is usually more than the price on the window sticker. Additional expenses, such as sales tax, registration and title fees, plus any dealership fees can add up quickly. Many of these costs are non-negotiable and are typically based on the purchase price.

The Age-Old Question: New or Used?

We’ve all heard the statistics about how a new car loses a large chunk of its value as soon as you drive off the lot. However, dealer perks like free oil changes, additional warranties, and lower insurance costs can significantly close the total cost of ownership gap.

Are you set on capturing the savings of buying used? Be honest about how long you plan to keep this vehicle and how the loan terms match that plan. This will help you avoid the “upside-down” situation where your car is worth less than what you owe. Be sure to research common (and uncommon) long-term used car repairs.

Next Steps in Your Car Ownership Journey

Now that you’re well-versed in the costs of car ownership, it’s time to take the next step toward buying a car in Richmond, VA. Contact Call Federal Credit Union to learn more about our new or used car financing options. With attractive rates and personalized service, we make buying a car easy and stress-free.

Click below to read our guide about the value and deals you can get from buying a car online.

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