What is the total cost of car ownership?

When budgeting for your next car or truck, it's important to realize its ultimate cost may be different from what's posted on the window sticker. Cars have many costs, which usually fall into two broad categories: costs to buy and costs to own. Here are some expenses to keep in mind as you consider buying a vehicle.

True costs to buy

If you plan to get a car loan to help purchase your new vehicle, you may need to crunch some numbers to figure out your budget. To help you determine a potential loan and payment amount, use USAA Bank's consumer loan calculator.

Final vehicle price and fees

In certain market conditions, a prepared shopper may score a deal to pay less than the sticker price. That final price will also drive other costs, such as taxes. Depending on where you live, the tax rate on vehicles may differ from what's charged on day-to-day purchases. In some states, the vehicle's value also factors into the registration fee.

You may also be billed for vague fees like "shipping and handling" or "dealer prep." Find out all these fees in advance of closing the deal — they should be part of your negotiation.

If you want items that may not come standard, like tinted windows, floor mats or high-end stereo packages, don’t forget about those added expenses. They add up.

Repair costs

Are you prepared for future repair costs? Beyond evaluating the various features of a car, you should also research its reliability ratings and consider that, for a given type of repair, some cars cost far more to fix than others.

Extended warranties can bail you out, but they come with an added cost to your final bill. It helps to have an idea of how long you'll own the car or truck beyond its factory warranty.

Warranty

It's important to do your homework and shop around for a warranty that fits your budget. This will come in handy when your dealer is trying to sell you an extended warranty. It may be more expensive or may not have the features that fit your needs, such as no or low deductible or repairs at any reputable repair shop rather than a particular dealer. Compare it with one you can find elsewhere.

Interest

Unless you're paying cash, one purchase cost will keep on going for years: interest. You may want to make a larger down payment, so you don't have to borrow as much. Also, you may encounter dealer options for 0% financing or a rebate. Be sure to do the math to determine which option will save you the most over the life of your loan.

Preapproval

When you start shopping, it's smart to get a car loan preapproval. Though a preapproval isn't required, when you walk into a dealership with financing in hand it can be easier to focus on getting the best price. Different lenders have varying definitions and processes for prequalifications and preapprovals, so check with your bank beforehand.

True costs to own

You'll likely pay many thousands of dollars to own and operate your car or truck after you buy it, and we're not talking just about monthly loan payments.

Your vehicle choice can have an impact on these costs of ownership:

Insurance

Auto insurance rates can vary quite a bit depending on a variety of factors. When narrowing your car choices down to a specific make and model, make sure your comparisons include insurance quotes.

Fuel

Fueling your new ride is going to be a major ongoing expense, so pay close attention to gas mileage. Let's say you drive 15,000 miles per year. At $2.50 a gallon, a car that averages 20 miles per gallon will cost you $800 a year more than one that averages 35 mpg.

Common maintenance

The cost of average wear and tear can differ from car to car. The cost of oil changes for a luxury vehicle compared to a nonluxury vehicle, for example, can be several hundred dollars even over the course of a year. Are you ready for those expenses?