Remember the freedom and excitement you felt the first time you drove your new car off the lot? For many people, that feeling quickly fades and is replaced with the reality of mounting expenses. If you’re wondering where all your money is going each month, here are five reasons your car is costing you so much money.
- You’re filling up your gas tank too often. Unless you invested in an electric vehicle, you’re relying on gas to power your engine – and it’s not cheap. Experts have forecasted that Canadian gas prices will hit an all-time high in 2018, so anything you can do to lower your fuel costs will ease the pressure on your bank account. If you’re visiting the gas station more often than you’d like, it might be time to have your car serviced – changing your oil, replacing your air filter and properly inflating your tires can all improve your gas mileage. In addition, the way you drive affects how much gas you burn. Natural Resources Canada lists five fuel-efficient driving habits that can reduce your fuel consumption by as much as 25 percent, such as accelerating gently, maintaining a steady speed, and coasting to decelerate.
- You’re ignoring routine maintenance. In addition to improving your fuel efficiency, routine maintenance can help prevent costly repairs. For example, rotating your tires extends their life, changing your oil keeps your engine healthy, and washing and waxing your vehicle prevents rust and corrosion. If you’re not sure where to start, your vehicle owner’s manual should outline an ideal maintenance schedule.
- You bought more car than you can afford. Your single biggest car expense is depreciation, since your vehicle starts losing its value as soon as you buy it. You can’t avoid this sad fact, but you’ll be able to minimize the impact of depreciation by paying off your car loan as quickly as possible. Most Canadians are doing exactly the opposite: they’re buying more expensive cars and justifying the higher price tag with a longer term on their car loan. It might not seem that bad if the monthly payments are manageable, but in reality, the fast pace of depreciation and the longer length of the car loan result in a negative equity situation – meaning most drivers owe more money on their car loan than their vehicle is actually worth.
- You’re paying too much for insurance. Car insurance is legally required – but overpaying for your policy isn’t necessary. The best way to control this expense is to compare quotes from an insurance broker, since different insurers will offer different prices and plans – even for the same driver. With a little online research, you might find a cheaper option that still provides you with comprehensive coverage. You can also call your current provider to ask about available discounts or money-saving changes to your payment plan. For example, paying your bill in one lump sum could save as much as 9 percent off your overall costs.
- You’ve been pulled over – and you’re paying the price. Speaking of lowering your insurance costs, a major factor in calculating your premium is your driving record. The more driving offences you’re convicted of, the higher your insurance rates. Plus, you’ll have the added headache of paying costly fines. Common traffic offences that raise your rates include distracted driving, speeding, careless driving, passing a school bus with its lights flashing and impaired driving.
If your car is costing you too much money, sit down and review all your vehicle-related expenses – knowing where all your money is going is the first step to managing your budget. Once you know where you’re spending the most money, you can create a plan to lower your expenses, whether it’s by changing your driving habits to reduce your fuel consumption or researching cheaper insurance options.