What is the true cost of ownership of your car?

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So many cars to choose from, but which is the best bargain in the long run? Image: Creativiity 103/Flickr/CC BY

The amount you pay at the dealership before you drive that new car home is only the beginning. The true cost of ownership of a vehicle is not so obvious on the face of it, no matter how shrewdly you dealt with that pushy salesman. But determining the true cost of ownership can be greatly helpful when deciding on your next vehicle.

All costs for five years

All the costs of owning a car — purchase price, licensing, depreciation, insurance, maintenance, fuel etc. — for the first five years add up to determining the true cost of ownership. Those factors differ widely between models. Knowing that difference can be especially helpful if torn between buying two competing vehicles of comparable price and amenities. Which of the two will give the most value in the long run?

How to determine cost of ownership

But how does one determine the true cost of ownership? Surely there must be a hundred factors to consider and weigh. Fortunately, both Edmunds and Kelley Blue Book offer free tools to do that work for you. Both do a thorough job of it.

An analyst at Edmunds who helped develop its “True Cost to Own,” or TCO, system explained how a bargain is not always a bargain:

“You are choosing between two shirts and you finally decide to buy the one that is $20 less. But later, you discover that it has to be dry-cleaned using a special process. Each time you get it dry-cleaned, it costs $4, plus the hassle of taking it to the cleaners. After five washes, the savings on the shirt you bought have disappeared, and you probably wish you had bought the more expensive one in the first place.”

Edmunds TCO tool

The TCO section on the Edmunds website provides a drop-down menu displaying makes and models for various years. Simply scroll down and click on the make, model and year you are considering. TCO will show the vehicle’s cost of ownership for five years, as well as details  breaking down how those expenses change over a five-year period.

Total Cost of Ownership Awards

Kelley Blue Book offers a comparable service. The cumulative data of that helpful online tool has become the basis of  Kelley’s recently announced annual “Total Cost of Ownership Awards.” The first year winners have been announced. Below are a few picks that may surprise some.

Top automakers

According to Kelley, the top automaker in the world, as far as long-term value goes, is Kia. Luxury automaker Audi, because of its low depreciation and fuel economy, ranked second.

Top green models

For top electric models, the Chevy Volt edged out Nissan’s Leaf. And all three top hybrid picks came from Honda because of low depreciation.

[The best hybrids available by true cost of ownership — Howdy Honda] 


Daily Finance 


Kelley Blue Book



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