'What is Cost of Ownership?' Asks One Third of US Drivers While Borrowing to Pay Repairs

by Tyler Wooley

April 4th, 2017 12:00 PM

what is cost of ownership asks one third of us drivers while borrowing to pay

According to the American Automobile Association, one third of drivers in the U.S. cannot pay for an unforeseen vehicle repair without going into debt.

AAA says the average trip to the shop will set you back between $500 and $600. So, what does that mean for the 64 million American drivers who can’t afford an unexpected repair bill?

Make sure to factor in all of the costs associated with the vehicle, not just purchase price or monthly payments.

Consumer Reports covers six points to help make a smart buying decision: depreciation, fuel costs, interest, insurance, maintenance, and tax. While maintenance is next to last on that list in terms of actual dollars spent (only 4 percent of total ownership cost over five years), the real danger is a lack of preparation.

Depreciation isn’t an immediate cost, so it’s easy to disregard. Fuel costs are perpetual and planned. Insurance is agreed upon beforehand and can easily be lumped together with the actual payment. Insurance, though it can be pricey, is at least consistent.

The surprise factor inherent to repair costs is what makes it seem like the straw that broke the camel’s back.

According to another study by AAA, $792 per year is the average amount spent on a vehicles maintenance. Some people either choose not to perform regular maintenance, or forget all together, which only raises the price for repairs when something does go wrong.

Since the reason these relatively small figures bring so much misery on auto owners is being unprepared, AAA suggests that saving at least $50 per month will help to cover the cost of regular maintenance and unplanned repairs.

So the next time you buy a car, make sure you can afford all of the costs, not just the payment.

#AutoMaintenance #AutoRepair #CostOfOwnership #CostToOwn #Maintenance #Prepare #Repair #UnexpectedCosts

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15 of 186 comments

Vvk on Apr 04, 2017

I have said it before and I will say it again: people should roll up their sleeves and repair their own cars. It is not sustainable to pay someone else to do it. I just had a stud on my alternator bracket break off because the damn mechanic did not torque the nut correctly. The quote to replace the bracket: $2200-2500. Requires lifting the engine, etc. Well, I rolled up my sleeves and repaired it myself. My cost: $7, including a new belt. I have many examples of this. Professional mechanics don’t do it properly because they are under pressure to make repairs in the least amount of time. The reason for this is because we do not pay them enough to do it. Who does a brake job properly these days? It takes me two hours to bed in the new pads. What mechanic will take the time? What customer will pay for this? What about all the little details of the proper brake job? Replacing one time use lock nuts? Anti-rattle clips? Lubricating the sliding surfaces with caliper grease? You must be dreaming. Nobody pays for that stuff. If you want repairs done the right way, you have to do it yourself.

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- Markf on Apr 05, 2017
  
  "I have said it before and I will say it again: people should roll up their sleeves and repair their own cars. It is not sustainable to pay someone else to do it." You are assuming a lot; that folks have a space to work out of, have the correct tools (a huge investment) have the time to work on the car and knowledge to not make things worse. It is also a giant leap in assuming that most people can correctly diagnose the issue. I would say most folks do not fall into your category. I would also venture a guess that most people have little to no interest in working on their own cars.
  
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- Dal20402 on Apr 05, 2017
  
  markf, once in a while I will agree with one of your comments! :) It is a major investment of time to learn to repair a car well. You have to learn not only physical wrenching skills but also how to read service manuals, including symptom trees and HVAC, electrical, and mechanical diagrams. And then, even once you have the skills, it requires a further major investment of time to keep an older car on the road. After kid activities and errands I have no time to run during the week, I'm lucky if I have four hours a weekend of free time. If I did everything myself on all three cars, I'd never have time to do anything else but wrench -- no yard work, no home DIY, and no f@cking just vegging on the couch.
  
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- Drzhivago138 on Apr 05, 2017
  
  Your cost was not $7. It was $7 plus whatever you think your time is worth. You paint professional mechanics with too broad a brush.
  
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- Vvk on Apr 05, 2017
  
  @Drzhivago138 Yeah, yeah, everybody thinks their time is so valuable and yet finds plenty of time to sit on the couch. Please.
  
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- Arach on Apr 05, 2017
  
  @Drzhivago138 Yes, yes, and Yes. I would gladly pay someone hundreds of dollars instead of me having to repair something... But I also would never go into debt to pay something. So I think there is truth to VVK, not in "everybody", but in some people. There are people out there who probably SHOULD learn to work on their own car, OR should buy cars they can afford to repair. For a whole LOt of people though, its not worth 2 hours of their time to save $100. I agree about the professional mechanics. My mechanics would certainly take the time to do everything they need to do, and I pay them for it. These are two separate issues. If someone wants to get a repair done WRONG to save a few bucks, thats not the mechanics fault, thats the person choosing to do it. I talk to my Mechanics about what they are doing to my vehicles and I have confidence they do it right. I use the same mechanics to tune and work on my race cars as I do my daily drivers, but I also tell them when to cut corners and when no to. I think its important to have a good relationship with your mechanics.
  
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- Mopar4wd on Apr 05, 2017
  
  @arach Well you need to make six figures a year before your 2 hours is worth more then a $100. Average wage in the USA is like $23.00 an hour (Median is even worse close to $15/hr) That's alot of your time when local shops are charging 105-120/hr.
  
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- Mopar4wd on Apr 05, 2017
  
  It really depends on the repair. Honestly people should use their smart phone and search youtube to see what may be wrong and how bad the fix is before taking it somewhere. The local Toyota dealer tried to charge my MIL $50.00 to change the cabin filter (that their parts dept sold her for $11.00). It took me less then 30 sec and no tools. Really a little knowledge goes a long way. Another example coil packs on my car are $60.00 at Napa and I can swap one with a $6.00 harbor freight torx tool in less then 10 minutes. The local indie charges $230.00 for that swap. Now I do use mechanics but not for simple stuff. Cam seals went on the Volvo last year and I'm not taking half my weekend (or more ) to fix that issue so I took it somewhere (local indie). While I have a fair collection of tools, I don't have a a garage and I usually don't feel like trekking thru the house to my basement to get my old pro tools from when I worked for a living. So I use the tools I keep in a little tool box in my car, all the tools in that are second hand or bought cheap at harbor freight and clearance racks. I have less then $60.00 invested in them, that along with a USB CAN tool ($10 bucks of ebay you can get a blutooth one for your smartphone) let me do 90% of the repairs I need to do. Well and a jack and jack stands I guess but I take those for granted.
  
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- Vvk on Apr 05, 2017
  
  @arach 2 hours of time to save $100 -- that is a simplistic view. First of all, the people who we are talking about don't make this kind of money. But let's even assume that $50/hour is peanuts to you. The two hours you are spending to make the repair the right way is worth way more than the $100 the professional repair industry would charge you to make the same repair. Making the repair correctly prevents other things going wrong, prolongs the life of your car, reduces chances of downtime and inconvenient/dangerous breakdowns. It gives you the chance to gain knowledge and experience and self confidence for making future repairs. It allows you to keep tabs on the internal condition of related systems in your vehicle that you tear into while making the repair. It is more convenient because you can make repairs at any time, at any place convenient to you. You don't need to conform to someone else's schedule, you don't have to spend time driving to the repair facility and waiting there or driving home and then coming back again. I have many examples of this, I could tell you many interesting tales. Furthermore, the $100 savings in many cases will turn into $1000 savings or even $5000 savings. I just told you how I saved $2200+ by spending a few hours under my car. That's like $700/hour. Nothing to sneeze at! NOT TO MENTION that this part broke due to another repair that was done improperly three years ago under warranty (a lock nut was reused.) I have been doing this for over 25 years, I have many examples of this. How one time my mom needed a new alternator and the dealer said "we cannot get to it until next week" and quoted $750. I stopped by a junk yard on my way to work (in my dress shirt :) and pulled a perfectly good alternator and replaced it later that night under the light of a street lamp after putting my babies to bed. I think the part cost me $12 with tax. Another time I helped a friend to replace a broken timing belt on his Escort. He was stranded near Annapolis and I just happened to be driving from Washington literally 20 minutes away from him at that particular moment. When you make your own repairs, you get more confidence as you go along. I remember how much I was fretting to replace the timing belt in my Subaru 25RS. It turned out to be the easiest t-belt replacement I have ever done. I have no idea how mechanics have the audacity to charge $600-700 for such a simple and easy repair. Also, it is so much fun! I am so looking forward to hacking into my new Tesla!
  
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Arach on Apr 05, 2017

It doesn't cost me $762/yr to maintain my FERRARI. Who spends almost $800 to maintain a car? I have a Ford F350 6.4L with 190k on it. Never cost me $762/yr to maintain... High Mileage Porsches, Cadillacs, BMWs, as much as I complain how expensive they are to own, never have I paid $762 a year. (I mean I've had single repairs more than 762, but not over time... IE I had a fuel pump repair in the porsche which costs about $750 plus an oil change that was about $70, but then the next year all I had was 2 oil changes for $140), so the per year cost was well under that) And I don't do the repairs myself... I take them to a shop... So how the heck is the avg cost to maintain a vehicle $762/yr? Who did they survey?

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- Mopar4wd on Apr 05, 2017
  
  Alot depends on how many miles you drive. Average american puts 15,000 miles a year on a car. The average age of a car is 11-12 years old in the US. A set of 4 tires every 45,000 miles on average would be $700.00 So that would happen every 3 years. add 2-3 oil changes a year (say $35.00) A set of wipers a year ($30.00), That alone gets you to $368.00 a year. Then you will need a battery every 3 years on average (I know many go longer) Tire rotations, Alignments, Brake jobs, Air filters Cabin filters Light bulbs. The average repair visit is over $400.00 so there ya go, it's pretty easy. I'm a cheapskate but I see that number as close to my average. Doing a quick review it look like I average close to that number even doing most repairs DIY, but I drive closer to 20k miles a year.
  
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Arthur Dailey on Apr 05, 2017

It seems like this posting is meant as a direct follow-up to the ongoing discussion we had last week regarding owning/buying versus leasing and the cost of operating an old(er) versus a newer car. Please excuse me for the length of this posting. Let's assume that you are an average working class Joe/Josephine. You have a chance at a new job that is 20 miles from where you live. You do not/cannot wrench yourself and do not know a lot about cars. You have kept out of trouble and have not bad debts but do not have longterm credit history. Using figures from the Toronto area, you can buy a Metropass (if you do not need to get off the TTC or go into other 'zones') for $134 or about $4.40 per day. If you are on a GO route it would cost about $150 or $4.93 per day. 1) You could buy a 'good' used car. You heard that Toyotas are good. In our area you can get an 11 year old Corolla with around 100,000 miles for $5k. Of course at that age it has been exposed to lots of salt. And probably is on its 2nd or 3rd owner and does not have complete service records. And it will not have bluetooth, traction/stability control. And how safe are 10+ year old airbags? But it would be 'certified' and e-tested. However banks will not provide loans for cars of that age. So you need to get financing from another party. Figure with financing, tax, etc 36 payments of $219. Total cost $7,884. As the average person you will take it to a 'Quicky Lube/etc' twice per year for oil changes and fluid checks. Maybe replace some the air filter occasionally and wipers and maybe some bulbs. $600 for 4 years. However a car that age will need its tires replaced during those 4 years. Probably a new battery. Maybe a coolant or tranny oil change. Probably at least a front brake 'job'. But what if something big goes? A tranny, a catalytic converter? You would either have to borrow again to pay for this or sell the car for possibly less than you still owe on it. And maybe 'wreck' your credit. If you have to miss work while you car is not operating or arrive late often enough due to is problems, then you might lose your job. If 'nothing' goes wrong at the end of 4 years you might have saved the $219 payment for 12 months and you have a 15 year old Corolla with 160,000kms and limited maintenance making it worth a negligible amount. 2) Say you are lucky and have saved or been gifted $6,000. You could pay cash for the above vehicle and have about $500 left. It will be lacking the same safety features as the above example. But you save the monthly payments and at the end of the year have $2,628 saved (if you are frugal) for possible repairs. Of course if something goes wrong before you have saved that or if you have spent it elsewhere, then you may have to borrow to repair the car, or sell it for way less than you paid for it and have to start again, without as savings as you previously had. And again your job may depend on your car operating whenever you need it. Or at the end of 4 years you have a 15 year old Corolla with 160,000kms and limited maintenance making it worth a negligible amount. 3) You lease a new vehicle. A lease at $215 per month is readily available with a 60,000 mile limit, which is slightly more than you need. It will have bluetooth, ESC/TC, and other passive safety devices and will probably be more fuel efficient than an older vehicle. Over the course of the lease you should not need to do anymore than the twice yearly oil/fluid changes/checks. You will build your credit history. And if you were in the position of #2 and had $6k saved you could then use that money to get a better place to live, invest, or even buy the leased vehicle at the end of the lease. Cost per mile: #1a with zero repairs/maintenance = 13 cents #1b with $2,300 in repairs & maintenance = 17 cents #2a with zero repairs/maintenance = 8 cents #2b with $2,300 repairs/maintenance = 12 cents #3 with $600 maintenance = 18 cents Since 1a and 2a are impossible scenarios, in return for a guaranteed monthly cost, no downtime and a more efficient and safer vehicle you are paying between 1 and 6 cents more per mile. The cost for #3 is $7.20 per day or about $3 more than you pay for public transport, not including insurance, gas and parking. Please feel free to double check my figures as I did rush through this.

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- Mopar4wd on Apr 05, 2017
  
  Arthur, appreciate the detail. Few things One, if your down at the bottom of the credit line (like the majority of working poor to working class) you aren't getting that lease rate. In fact you may not get a lease at all (usually need at least a 670 for most OEM backed leases). Two, Sales tax license fees and property tax can throw things out of wack. Here in CT I would have to add 6.35% to each lease payment plus would owe %0.035 of the MSRP of the car in property tax each year. Three, In the used market features cost less then new, driving a car with leather and a moonroof may be nicer then a stripper with bluetooth. Four, I have lived this scenario you describe, except I do simple repairs myself, I average 8-10 cents per mile ownership costs (less gas and insurance) Now I pay cash but my average is around $3k. Most I have spent is $6,500. Been doing it for 20 years almost. Every time I run the math on buying or leasing a new car the budget doesn't work so I don't do it. Also in the US banks will indeed finance 10 year old 100k mile cars, crazy but they will.
  
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- Arthur Dailey on Apr 05, 2017
  
  @mopar4wd Mopar, Thanks. I mentioned the Toronto area specifically because 1) Canadian used car prices are higher than American, 2) due to salt/winter cars here do not last as long as those in the USA. I did however convert to Imperial for the 'mileage'. When buying an 11 year old Corolla, not sure if having leather and a moonroof would be benefit or a detriment. The 'certification' requirements for cars in Ontario were 'strengthened' last year, so the $5k price for an 11 year old, 100,000 mile, certified Corolla is reasonable based on checking the ads. For $3k you are looking generally at 15 year old, 125,000 mile models sold 'uncertified'.
  
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Chocolatedeath on Apr 05, 2017

I guess you guys didnt like my post from yesterday here...It seems alot of these are not only worse but just what I was pointing out. ok..i can live with it.

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