How Much Does a Car Really Cost?

Understanding the total cost of owning a vehicle goes beyond the initial purchase price. The Vehicle Cost of Ownership (VCO) encompasses various expenses over the lifetime of your car. By calculating the VCO of the cars you’re considering, you'll have a clearer picture of the long-term costs associated with your Honda. Here's a step-by-step guide to help you understand and compute the VCO.

Cost of Buying a Vehicle

The first thing you have to calculate is the total cost of buying the vehicle, and although it’s the starting point, the sticker price isn’t the only thing that you should consider. The purchase price also includes taxes, registration, and any extended warranties or add-ons. Then, if you've taken a loan or are leasing the vehicle, you'll need to factor in interest rates, monthly payments, and the duration of the loan/lease.

Cost of Operating a Vehicle

Now that you know how much it costs to buy a vehicle, let's dive into the cost of operating it. These are the costs that you will incur from driving your vehicle each day and includes fuel, insurance, maintenance, and annual fees such as license and registration.

Fuel Expenses: Calculate your annual fuel costs. Take note of the average miles per gallon (MPG) for your Honda model and the current fuel prices.

Annual Fuel Cost = (Annual Miles Driven / MPG) * Fuel Price per Gallon

You can divide the results by 12 to get a rough estimate of your monthly fuel expenses.

Insurance: Get a quote or review your policy to determine annual insurance costs. Keep in mind that rates can vary based on factors like age, location, and driving history.

Maintenance and Repairs: Honda vehicles have a reputation for reliability, but routine maintenance is a part of car ownership. Factor in oil changes, tire rotations, brake jobs, and other periodic services. Consider setting aside a budget for unexpected repairs as well.

License, Registration, and Taxes: These fees recur annually or biennially. Be sure to add them to your yearly expenses.

Miscellaneous Costs: These might include parking, tolls, or accessories and enhancements you add to the vehicle.

Additional Costs to Consider

Although not a direct expense, consider the opportunity costs of the vehicle or the return you could have earned had you invested the money elsewhere rather than spending it on the car. Another factor that isn’t an out-of-pocket expense but bears mentioning is depreciation. Cars lose value over time, and you’ll want to know how much you can possibly sell the car for in the future. Generally, new cars depreciate faster in the first few years. Research the expected depreciation rates for the Honda model you own or intend to buy. When you sell your Honda, the proceeds will offset some of the ownership costs. You can use online tools or consult with dealers to estimate your car's future resale value.

Formula to Calculate VCO

Combine all of the factors above to get a full picture of how much a new vehicle will cost using the formula below.

VCO = (Initial Purchase Price + Financing Costs + (Fuel Expenses + Insurance + Maintenance + License & Taxes + Miscellaneous Costs) * Number of Years Owned) - Resale Value

Find Your Next Vehicle at Don Moore Honda

By understanding the full cost of owning a Honda, you can make informed decisions about your vehicle purchase and budget accordingly. At Don Moore Honda, we want our customers to make buying decisions that will fit their budget and their lifestyle in the long term. Our dedicated representatives make it their job to ask the right questions about your daily needs to help you find the vehicle that belongs in your driveway today, tomorrow, and years from now. Our financing team does the same to make sure the car you choose aligns with your long-term financial goals. Don Moore Honda is always here to help and provide clarity on any costs related to your car ownership journey. Visit us today to get started.