Getting a license and a car is a rite of passage for many American teens. More young Americans may be passing it later than what’s considered traditional, but the perception remains in triumphant social media posts and media.
What’s also common are confused posts about the true cost of owning and maintaining a car. A kid in Durham in his or her first day of driving school will most likely have the same glazed look as a non-driving adult in Nuckolls County when you ask them to list their payables. Auto insurance, car registration fees, and depreciating car values are not exactly at the forefront of a new driver’s mind.
Here are some of the fees people may not know about when buying their first vehicle:
New Car Fees
New car owners typically pay three types of fees: vehicle registration fee, sales tax, and documentation fee. The first registers a new car under the owner’s name, the second can have an added surprise of a city or county tax above the state tax, and the third covers a dealer’s expenses over filing paperwork. Buyers may also deal with dealer and advertising fees.
Drivers have a variety of online tools to help them sort their numbers out. Online calculators can help them choose between two cars or decide if they should use their parents’ hand-me-down to buy a new ride. Other calculators help determine the total cost of owning a particular car for a five-year period.
Car owners are required to renew their motor vehicle registration annually by paying a fee with their state’s transportation agency. Personal auto insurance is required by almost every state. Minimum car insurance requirements vary per state. Alabama and Arkansas, for example, have the same requirements, while Oregon has quite a lot more than either state.
Calculating your car’s depreciation value is important. The American Automobile Association estimates that depreciation accounts for $3,000 of the cost of owning a new vehicle. Successful car maintenance can minimize depreciation costs. Maintenance costs can be reduced from the average $849 a year if drivers are careful with their vehicles and keep a keen eye on its health.
Taking good care of your car means keeping up with fees. A cherished car won’t be there forever if you lapse on your registration fee or auto insurance. Paying your dues also goes towards your safety and various state initiatives.
The breakdown of the fee varies state by state, but they all go toward a state’s vehicle-related initiatives. Vehicle registration fees in Arizona, for example, help fund the state’s air quality research.
Paying for auto insurance has obvious benefits. Damage or theft, bodily injury or property damage caused by the driver, and medical expenses are covered by auto insurance, making it indispensable for a modern driver. That doesn’t mean you need to test the limits of your insurance policy. Make sure you abide by the traffic rules in your city to avoid penalties and accidents. Stay safe by maintaining your vehicle properly.