The following is a guest post by Timothy Ng.

When you run the numbers to help decide whether you can afford a new car, you need to be sure you look beyond the price paid at closing.  The long term cost of ownership can make a big difference to your bottom line.

As you will see there are many factors that contribute to the cost of owning a car and it’s a good idea to look ahead to make sure your purchase fits into your budget.

What is the real cost of owning a car?

Let’s consider all the costs of ownership over a five year period. Some costs such as insurance may go down as the vehicle gets older, while other costs such as maintenance may go up.

The costs of owning and running a vehicle include: 

• The total purchase price
• Depreciation
• Insurance
• Financing fees and interest
• Taxes and fees at the time of sale, or applicable usage taxes such as the gas guzzler tax
• Fuel
• Maintenance and servicing
• Repairs

Top 10 Vehicles under $25k and the cost to own them

To arrive out our list of cars, we looked at Edmunds Lowest True Cost to Own^® Vehicles for October 2010 and selected those that retailed under $25,000.   We determined the cost of ownership for each vehicle using Edmunds True Cost to Own^®

The cost of ownership for these cars is based on:

• A five year period.
• The car being driven 15,000 miles per year.
• The ar is financed using a traditional car loan, and is not leased.
• Having a good credit rating to determine the finance rate.
• A 10% deposit at purchase.
• A loan term of 60 months.
• The average demographics for insurance purposes.

1 – Chevrolet Aveo

This is a four door sedan with a two litre engine and costs $16,270 to buy new. At the end of a five year period the Aveo will have cost you $34,761 which is an average cost per mile of 46 cents.

This cost is based on: 

• A depreciation cost of $9,100.
• Taxes and fees to the total of $1,813.
• A fuel bill of $7,938 over the five year period.
• A total of $3,897 in maintenance costs.
• You are likely to have to make $838 worth of repairs.
• Your financing will cost you $2,503.
• Insurance costs of $8,672.

2 – Honda Fit

You can get into a sporty four door hatchback, with a navigation system included in a new vehicle for $21,183. After five years you will have paid $36,470 towards your car, which is an average of 49 cents per mile.

The costs over five years for a Honda Fit include: 

• A depreciation cost of $10,348.
• Taxes and fees to the value of $2,349.
• Fuel costs of $7,938.
• Maintenance costs of $3,325.
• A $773 repair bill over five years.
• Financing costs of $3,259.
• Insurance costs of $8,478.

3 – Smart fortwo

The passion cabriolet model is a two door convertible in which you will look very smart, and can buy new for $20,391. After five years your smart car will have cost you $35,129 which is an average of 47 cents per mile.

Your smart car costs include: 

• Depreciation costs of $11,481.
• Taxes and fees of $2,236.
• $7,175 worth of fuel stops.
• Maintenance costs of $4,607.
• Repairs totalling $1,189.
• Finance costs of $3,137.
• Insurance premiums of $5,304.

4 – Honda Accord

The EX version of this four door sedan will cost you $24,500 to buy new. However, after five years the vehicle will have cost you $40,503 which works out at 54 for every mile you drive.

Your Honda Accord costs include: 

• Depreciation of $11,181.
• Taxes and fees which will cost you $2,714.
• Fuel costs of $9,524.
• Maintenance costs of $3,475.
• Repairs to the value of $773.
• Financing costs of $3,769.
• Insurance costs of $9,067.

5 – Jeep Patriot

A new Jeep Patriot will open the door to adventure for you for just $21,061 and after five years will have cost you $39,314. This means you will have been paying an average of 52 cents for every mile you drove.

The Jeep Patriot costs break down to: 

• Depreciation costs of $12,277.
• A total of $2,295 for fees and taxes.
• Fuel costs of $9,524.
• Maintenance costs of $3,322.
• Repairs totalling $923.
• Finance costs of $3,240.
• Insurance premiums to the value of $7,733.

6 – Toyota RAV4

You can drive away in a new Toyota RAV4 for $25,084 and after five years you will have paid $41,091 for your car. This works out at an average of 55 cents per mile.

This breaks down to the following costs over five years: 

• Depreciation costs of $10,881.
• Taxes and fees of $2,753.
• Fuel bills of $9,922.
• Maintenance costs of $3,629.
• Repairs to the value of $887.
• Finance costs of $3,359.
• Insurance costs of $9,160.

7 – Mazda 5 

If you’re looking for the practicality and space of a van then you can buy the Mazda 5 for $23,589 just be aware that over five years the 5 will cost you $41,203. This works out to an average of 55 cents for every mile you drive.

The costs of the Mazda 5 over five years: 

• Depreciation costs of $13,188.
• A cost of $2,547 in taxes and fees.
• Fuels costs of $10,345.
• Will require $2,865 of maintenance.
• Will cost $858 to repair.
• Finance costs will be $3,629.
• Insurance premiums of $7,771.

8 – Honda Insight

To do your part for the environment and purchase a new Honda Insight hybrid gas and electric car will cost you $24,167. Over five years you will have spent $35,281 which is an average of 47 cents per mile.

The costs of ownership for the Honda Insight are: 

• Depreciation of $11,237.
• A cost of $2,672 in taxes and fees.
• A $5,810 fuel bill.
• Maintenance costs of $3,173.
• Repairs to the cost of $831.
• Finance costs of $3,718.
• Insurance costs of $7,840

9 – Ford Ranger

If you want and need the convenience of having a tray then you can buy the two door super cab Ford Ranger new for $23,655. Over five years your truck will have cost you $44,024 which is an average of 59 cents per mile.

The costs of your Ford Ranger over five years include: 

• Depreciation costs of $12,716.
• Taxes and fees for $2,562.
• Fuel costs of $9,922.
• Maintenance costs to the value of $3,553.
• Repairs for $966.
• Finance costs of $3,639.
• Insurance costs of $10,666.

10 – Chevrolet Impala

You can buy the four door sedan, Chevrolet Impala for $22,950 new. After five years you will have spent $43,907 on your vehicle, which is an average of 59 cents per mile.

The costs over five year for the Impala include: 

• A total of $12,816 in depreciation.
• A cost of $2,913 in taxes and fees.
• Fuel costs of $10,825.
• Maintenance of $3,046.
• Repairs to the value of $851.
• Finance costs of $3,530.
• Insurance costs of $9,926.

So before you opt for the vehicle with the cheapest sticker price, consider all the costs of ownership over the long run.

[Source and images: Edmunds Lowest True Cost to Own^® Vehicles for October 2010]

Timothy Ng lives, breathes, and sleeps personal finance! Check out his in-depth guide to doing a balance transfer for life where he answers everything you need to know before applying for a balance transfer credit card.

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