A car in Houston, as well as most cities in the nation, is not strictly a mean of transportation; it is an investment purchase. Just like any other investment, the right planning will result in earning a higher return on investment. A purchase that is only done every couple of years requires a certain amount of extra research. This obviously applies to car acquisitions. A car takes an initial lump investment, annual expenses, hidden and obvious expenses.
Smart Houstonian car shoppers have recognized that Houston is the 6th largest metropolitan area in the nation, and the 3rd with most fortune 500 headquarters. This is resulting in a high supply of used cars. The supply paves the road to great potential to save on used cars in Houston. With quick focused research, you’ll know the perfect make, model. You will also have an understanding of the fair market value. Kelly Blue Book is an ideal place to determine the fair market value of a car. Needless to mention, when making the final decision, the least expensive is not always the best fit, nor does it put you in the ultimate economical situation.
You should first determine a buying budget, and allocate an annual expense to the privilege of owning the car. Make a list of the cars that you see yourself driving, then call your car insurance company to have an idea of the different rate brackets. Hence, the asking price does not equal the final out of pocket value. After buying the car, you are to pay taxes, license and registration. Moreover, never neglect to consider the initial preventive maintenance (oil changes, fluid flushes etc.). Each of the factors will be discussed in details in articles that are dedicated to it.
Hidden costs that I consider to be most significant are; time depreciation, miles depreciation, preventive and emergency maintenance. Also, Interest (paid on loan, interest could have earned). Last but not least, please remember that in 2007, the average price the American consumer is paying at the pump is 3 dollars.
Throughout the years, on average, a compact car costs me about 4 cents per mile in maintenance. Therefore, depending on the number of miles your car drives on a gallon, the ratio differs, but as illustrated in the table below, that at 25 miles per gallon, you should plan to spend a dollar in maintenance for every gallon of gas. Below is a the formula used to compute the numbers in the table, which assuming that the one way distance to work is 5 miles, remember the table is strictly based on my assumption, and experience.
For those that are numbers oriented, I provided the following formula, for those that are not; you can skip the formula and jump to the table.
(((distance to work one way *520)/gas mileage)*3.00) + (distance to work one way*20.8)
Miles/Gallon 10 15 20 25 30
Annual Gas Cost 780 520 390 312 260
Annual Maintenance Cost 104 104 104 104 104
In summary, buying a used car can save you a lot if the right research is done, and the hidden expenses are taken into consideration.