Think That $25,000 Car Is Affordable? Think Again.
Sarah thought her $25,000 car was a smart buy. But once insurance, taxes, and repairs kicked in, she realized her “affordable car” was closer to a $35,000 commitment.
When you buy a car, you’re not just paying the sticker price—you’re signing up for years of ongoing expenses.
The True Cost Breakdown
- Depreciation – Cars lose 15–25% of their value in the first year and about 50% by year five.
- Insurance – Expect anywhere from $100–$300 per month depending on age, driving history, and vehicle type.
- Taxes & Fees – Sales tax, registration, and documentation fees can add thousands upfront.
- Fuel – Gas averages $150–250 per month for most drivers. EVs save on fuel but often cost more upfront.
- Maintenance & Repairs – Oil changes, tires, and brakes add $1,000–2,000 yearly.
- Financing – With average rates over 10%, buyers pay thousands extra in interest.
Smart Budgeting Rules
- Keep your car payment + insurance under 15% of monthly income.
- Don’t finance more than 60 months unless you have no other choice.
- Always leave room for maintenance.
👉 Pro Tip: Before buying, run the numbers on total cost of ownership—not just the monthly payment.