Having a car will bring lots of benefits. Not only simply as transportation means, but a car is also an entertainment place where you can gather with your friends or families to enjoy a long trip together. So, more families think that car is one of a must item to have for their household. However, there is one less fun point on having a car. Yes, it is an obligation to pay for the monthly payment for your car. Do you how much is average car payment per month? Well, let’s learn more about how much you need to pay for your monthly payment. Check out the details below.
How much is Current Average Car Payment per Month?
The average car payment per month for a new vehicle set in $504in the second quarter of 2017. For used cars, the average is only about $365 a month. The average lease payment is going to be $412 monthly. Those who drive their vehicles approximately 15,000 miles per year the cost can add up to about $706 per month. The number keeps increasing then the previous year. According to auto experts, this increase is recently happening due to the increasing capability of society to purchase more expensive vehicles. However, do you think the number has covered all the total cost? Don’t be happy right now, and it’s far from it.
As most car owners might already know, this increasing capability also went up along the increasing number of auto loan. In 2015, about 85.9% of new cars and half of all used cars was financed through a loan. The data shows that most Americans, especially those living in the cities, find it necessary to take out a loan to support their needs for a car. Now, the average auto loan hit the number of $30,032. That auto loan number has an average length of 68 months or about 5.5 years. Additionally, the interest rates on loan are also rising and cost them over 4% on the average annually.
It does not stop right there, and there are some additional costs that add up your total monthly payment. You also need to calculate these following charges, including:
- Car insurance
Most of the car owners don’t even bother to spend some money to pay for car insurance. Yes, car insurance is very useful for car owners in case the worst happened with their vehicle. The number of insurance costs can vary on each area. Here, you can include your average monthly premium car insurance payment.
Gas bill is different from each car owner depending on how far and how often they are usually driving. Of course, those who frequently drive traverse between cities will spend more than those who only use the car back and forth to the 5-km away office. Here, you can estimate your fuel spending by dividing the number of miles shown on your vehicle on monthly driving basic by fuel economy rating. After getting the result, you need to multiply the number by the price of a gallon of gas in your area.
- Maintenance and repairs
According to auto experts, the average cost of a new car to get repairs, maintenance, and tires is about $99 a month. The most common type of maintenance is tire rotations and oil changes. That is usually done at 5,000-mile intervals or 3 times each year. However, car owners who still under factory warranty won’t have to spend on repair and maintenance costs. The warranty usually covers the cost for about three years or 36,000 miles. It’s recommended to save some money for repairs, especially if your car isn’t under warranty. Whether you need it each month or not, this saving is going to help you prepare for unexpected car expenses in the future.
- Registration, fees, taxes, and other expenses
Remember, your car will bring a lot of expenses including registration, taxes, fees, and others. You can estimate all those costs by dividing your annual registration renewal amount of your vehicle by 12. Take a note! You can also add other recurring expenses, for example, is parking costs.
You might realize that cars will lose their value every month. In the first year, cars lose their value from 20% to 30%. Over the next five years, depreciation range between 15% and 18%. The number is depending on the type of vehicle and market conditions. However, it will depend on you whether you want to include depreciation or not in your car budget each month. You might don’t feel burdened paying on a monthly basis, but over the years you will start to realize the costs. So, buying cars that hold their value will help you to save money in the long run.
Tips before Purchasing a Car
Before purchasing a car, you should do some research and calculation to get a bigger picture. First, consider what type of car you can afford to buy. Each type of car has different specs and price, so you have lots of choices. Don’t fall easily under the persuasion of the dealership. You can shop around the dealers of different automakers to compare the specs and price. It’s good if you can get better specs with lower rates.
Next, calculate all those various expenses to determine monthly payment for your future car. Can you afford to pay all those expenses considering your monthly income?The decision to purchase a car is a matter that should not be taken lightly, especially when you have to finance it under a loan. Don’t burden yourself only to be able driving a car. For example, if you want to save more, you can keep driving your old car for longer rather than purchase a new one.Yes, because a new vehicle will cost you a lot more than using old cars. If you seldom on using a car, it is even better to get carpooling or taking public transportation instead. There is always another way to travel at ease without spending more for monthly auto payment.