During our ongoing discussion of buying a car, somebody pointed to a handy little tool at Edmunds.com. (Edmunds is an excellent resource, sort of like Bankrate, but for cars.) Here's how their site describes this tool:
You've narrowed your choices to two new cars, but you can't seem to decide which one is really the better deal. The purchase price of each car is nearly the same. The features are similar, and you like the way they both look. Still, a nagging feeling tells you that there must be a meaningful difference between them, even if it's not readily apparent during the purchase process.
Your intuition is right on the money. And now there is a new tool that reveals the hidden costs — all the costs — associated with buying, owning and operating a car over a five-year-period. It's called True Cost to Own.
The Edmunds Inc. True Cost to Own pricing system calculates the additional costs you may not have included when considering your next vehicle purchase. These extra costs include: depreciation, interest on your loan, taxes and fees, insurance premiums, fuel costs, maintenance, and repairs.
This calculator allows you to compare cost of ownership on new and used vehicles. Enter your make, model, year, and trim style, and the calculator will compute an approximate cost for operating the vehicle. This is handy, though I do wish it had information for older cars. (It covers only model year 2003 and later.)
If you're looking to purchase a vehicle, this is another great weapon to add to your arsenal. (I have to confess, though, that looking at the TCO for various cars this morning has basically made me want to swear them off and to commute by bike for the rest of my life. Is owning a car really worth $500/month? Yikes.)
[Edmunds.com: True Cost-to-Own calculator]
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.