There are many expensive purchases we make in our lives. Buying a home is probably top of the list. For most people, owning a piece of real estate is still the goal. In the long term, you’ll be able to pay off your mortgage and live without paying rent.
If a property is the most significant purchase you’ll ever make, buying a car may be the first big one. And unlike a home, which can appreciate over the years, a car’s value will only depreciate as time goes by, and the mileage goes up.
Owning a car is not an investment. Yet many people continue to buy automobiles and spend on their maintenance. With a recession just in our rearview mirrors and a pandemic still driving uncertainty, is car ownership still a good decision in the current climate?
The cost of car ownership
For companies that require a vehicle fleet, the costs of operating and maintaining one or more cars may be significant yet non-negotiable. This is particularly true of heavy-duty vehicles. Owners can effectively save on costs with aftermarket parts or a DD15 overhaul kit for refurbishment.
But for the average person who buys a car, the cost of ownership can be far greater than you might expect. The listed price isn’t all you pay for. There are sales taxes, dealership fees, and registration and title fees on top of that. And unless you pay with cash, you’ll end up having to pay a little extra for financing charges.
All of that actually covers only the cost of acquisition. You’ll want to find some insurance coverage before you ever hit the road. Once you do, you’ll need to factor gas and parking fees into your budget. And there will be repairs and maintenance costs to consider over the long haul.
When all’s said and done, how much does it really cost to own a car? According to the AAA, in 2017, it was an average of $8,469 annually, or $706 each month. Depreciation will make that cost heavier upfront. Over the years, ad valorem taxes and financing costs will taper off to make this more manageable. But it’s still a hefty amount.
Ownership versus sustainability costs
Those numbers alone can effectively price out many households from getting into car ownership. It’s simply not worthwhile when you have to pay rent and cover food and utilities out of the same budget.
To be sure, there are ways to trim those costs. Good driving practices help you to manage fuel economy better. Buying a sedan will save a lot on fuel compared to an SUV. But even when you take those tips and hacks into account, many people in modern times have decided not to buy a car.
Sustainability has grown into a major concern over the years. And our dependence on fossil fuels is a significant driver of climate change. Every year, it seems as though we are witnessing record-breaking extremes of weather or environmental disasters, only for the next year to top those.
We can’t control the damage caused by the production or disposal of vehicles by the auto industry. But 80-90% of a car’s environmental impact comes from fuel consumption and carbon emissions tied to consumer behavior.
Ultimately, many people believe that simply owning a car clashes with sustainable values. By choosing not to buy a vehicle, they cut back on demand and avoid emissions altogether.
The health factor
Despite all those considerations, the age of the pandemic may encourage more people towards car ownership. And that has little to do with crunching numbers and everything to do with looking after your health and safety.
Ride-sharing and public transportation are far less attractive when you run the risk of infection through airborne transmission or surface contact. And you can’t get to everywhere you want (or need) to be just by walking or biking.
Months into the pandemic, consumer sentiment reflects this. 39% of prospective owners want to avoid ride-sharing. 44% expressed similar concerns about public transport. The risks may increase for those who are required to report back to the office. And with no certainty regarding a working vaccine timeline, it’s unclear when it might be safe to mingle again in large numbers in public.
A car may not be an investment, but your health certainly is. Thus, deciding whether to buy a car shortly may be weighed against your financial capability. It could come down to your desire to lead a sustainable lifestyle. Or it could be decided by your concern over staying safe while covering long-distance travel.