6 Surprise Expenses After Buying a Car

Your kid’s first car purchase is a monumental occasion. When they pay for it themselves it becomes a special time in their life when they can look back and say “check that out – I did that all on my own.” Before forking out all that money though, did you warn them that they would have to continually spend more money periodically for upkeep and the privilege of owning the car? I never knew how owning a car could turn into a money pit.

Knowing what I know now, here’s what Papa says: your kid better have a job or a bunch of extra money saved away in addition to the cost of the car.

Growing up I always thought that once I bought a car that my expenditures would be done. Insurance? I didn’t know I needed that for a car. Gas? Well, I guess that makes sense. Wait, it costs how much per gallon? Oil changes? Are we talking avocado or veggie or … ? New tires cost how much!? Taxes? I thought I already paid for those when I bought the car – and I have to pay more every year? These are the 6 biggest additional costs to owning a car that you need to prepare for.

1. Fuel
2. Insurance
3. Oil Changes
4. Tires
5. Brakes
6. Taxes

Fuel

Have you lived under a rock? Please tell me you can do basic math (if not I can do an article on math concepts). Fuel is not cheap, and there are multiple kinds of fuel: Regular, mid-grade, premium, E85, diesel, etc. Make sure your kid understands that every car (and depending on the engine) takes a prescribed type of fuel, and it also burns it at a given rate.

If they buy a Japanese car with a small engine, they can expect around 20 miles per gallon. If the car has a 15-gallon tank, and gas is $5 per gallon, it will take $75 to fill up the tank and will get 300 miles for that $75. If they drive about a thousand miles per month they will spend about $250 every month on gas (that’s roughly $3,000 per year). Take a look at the signs at the gas station next time you’re out and about and you can guesstimate fuel costs to help put this in perspective when you talk to your kid.

Insurance

In most states (if not all) you are required to purchase insurance for your vehicle. It is designed to protect you, your car, and others that may be involved if you are in an accident. A young driver can expect to pay several hundred dollars per month – even for just basic coverage that only covers other people and their property (also known as liability coverage). Expect to pay even more for full coverage (coverage for others and you). Once your kid gets older, has a good credit score, and several years of safe driving under their belt then their monthly payment will get down under a hundred bucks.

Oil Changes

You might have seen specials from your drive through oil change shop where you can get your oil changed for $29.99. Be sure to read the fine print – that’s for a fifty-year old Camry with a four cylinder engine. Most newer cars need synthetic oil (as opposed to dino-oil) and that is a lot more expensive. Oil is not something you want to cheap out on for a car. Make sure to teach your kids to put what the manufacturer recommends in the car and change it at the prescribed intervals. It could be as little as twice a year (if you don’t drive much) or once a month. Just be aware that plenty of newer cars will cost around $100 for an oil change.

Tires

Holy guacamole did I screw up buying that 2004 Nissan Quest. It was a left over model that was still new sitting on the dealer’s lot in 2006. We got it for a great deal, but I neglected to do a quick check on tire prices. The tires that came with the van only lasted about 25,000 miles and we easily did that in less than two years. It was quite the shocker when I called up my local tire shop when it came time to change them out. It was going to cost me over $1,000 to install four new tires!

I was floored. I was hoping to get some cheaper tires, say around the $100 mark for each tire, but come to find out that Nissan decided to use a custom size tire for their Quest van, and only one manufacturer made that size. Therefore the law of supply and demand had me between a rock and a hard place. I wish I had known to check tire options and prices before I bought that stupid thing. As it turns out we sold it pretty quick right after I put tires on it, so at least I didn’t have to go through that expense again.

Brakes

As I have mentioned before, I’m lucky to have been taught various handy and DIY skills growing up, so I am confident in changing out my own brakes. Some pads and rotors for your front brakes will usually run you about $150 for daily-driving quality parts alone. Did your kid get that fancy sports car with the Brembo brakes? Or maybe that snazzy German ride? Now they can expect roughly $1,000 for a brake job.

Teach them to look up the costs of pads/rotors/drums for the car they are thinking about getting. Have your kid call around to various shops and dealerships and just ask what the brake service costs for that new ride they want. Granted a car shouldn’t need new brakes every year (or will it? How much driving will they do?) but it is still an expense that is bound to come up.

Taxes

I hate taxes. I saved this one for last since I hate thinking about it. In Georgia, you have to pay the tax commissioner a fee just for the privilege of driving your vehicle on the road. You will have 30 days to pay a tax based on what the state thinks your car is worth, and the percentage of that value for which you are required to pay as a tax.

Now obviously the cheaper the purchase price the lower your tax liability will be, but did they get that nice new car? I hope you taught them to save a few thousand dollars to pay the tax man. On the bright side, since a car is a depreciating asset the value will go down from year to year. Hence their tax obligation will go down year to year – but it still stinks.

This is by far not an exhaustive list, but I sure do wish someone would have told me about these costs before I dropped $38,000 on that new Toyota 4-Runner back in 2001. I drove 1,000 miles the first week I had it, changed the oil every 5,000 miles at $80 a pop, tires cost $1,000 and only lasted 40,000 miles, and since I was young insurance was $300 per month. I wish I had that money back that I needlessly sunk into that SUV and stuck it in a basic investment account. But that is a topic for another article.

At the end of the day, teach your kids to research the maintenance costs for the vehicle they are thinking about purchasing. Go over these thoughts with your kids before they make this kind of investment. It just might make better financial sense to get something different that still fits their needs. What did you wish you knew before you bought your first car?