How to Avoid Hidden Car Costs
August 09, 2016Experiencing two car accidents in four months has a way of making cars top of mind. As I was discussing this, one of our resident financial planners, Teig, offered great guidance about avoiding the hidden cost of cars. Here are his thoughts:
I really love cars. I bought my first car before I was old enough to drive and read the entire mechanic’s repair manual for it, cover-to-cover. The car was older than I was, a classic ’68 Mustang, and I spent every spare hour for three months repairing the engine, replacing worn out parts, painting, and polishing it up for my 16th birthday. It was a real head turner until a drunk driver plowed into it head-on one night – an event I shouldn’t have survived, and my car certainly didn’t.
Since then, I’ve owned about a dozen great cars, some new, most over 15 years old, some common, and most extremely rare. I’ve always been able to keep my cost of owning these rolling works of art and fine engineering to a minimum by knowing what to maintain and how so I was able to offer Tania some guidance on her questions. I will now pass them along to you, along with a few other money saving and car-life sustaining tips:
At the gas station, choose the fuel recommended by the manufacturer of your vehicle. All cars come with a specific fuel “octane” rating requirement, and filling up with the wrong octane rating can cost you big time. The octane rating is a measurement of the pressure at which fuel combusts (explodes) and is the number you see on different grades of gasoline at the pumps (usually 87, 91, 93).
Since combustion is what drives the engine of your car, you want every little explosion to happen right when it is supposed to for maximum efficiency. The manufacturer knows precisely when your fuel must combust for that efficiency, and they give you the octane number that works best for your car. You can look it up online, it’s in the owner’s manual, or in some cases, it’s printed on the gas cap or inside the gas door. Also, using the wrong octane will cause your engine to run inefficiently, use more fuel than you need, and damage the engine slowly over time – and repairing or replacing an engine will cost you about 10% to 20% of the car’s original value.
If you do decide to put a higher octane fuel than recommended into your tank, you may be spending hundreds of dollars more than you need to per year: According to AAA, the average gas price nationwide right now is $2.20 per gallon for regular, 87 octane, and $2.72 per gallon for premium, 93 octane. That’s a difference of $.52 per gallon. If the average distance driven per car in the U.S. is 15,000 miles, and the average gas mileage is about 21 miles per gallon, then buying premium gasoline when you don’t have to is costing you over $371 per year. Amazingly, that’s almost the average cost of a new set of tires.
Avoid letting your fuel level get below a ¼ tank to avoid damage to the fuel pump. No matter how clean your gasoline, it still contains some sediment that settles in the bottom of your tank. When you let the tank get low, those sediments can get sucked into the fuel pump and filters, slowing the flow of fuel, causing you to use more of it than you need to use, and damaging the fuel system – all of which drain more money out of your pocket.
Rotate and balance your tires every 5,000 miles. For average drivers, that’s three times a year, and it’s an inexpensive and easy way to get the most value out of your tires. Assuming you maintain them (keep the tire pressure between 32 and 35, depending on your altitude), most tires will last you 30,000 to 40,000 miles so plan to buy a new set every three years or so.
A decent set of tires on my family’s every day drivers typically run between $400 and $600, but shop around as prices do vary wildly. Also, be mindful of the seasons where you live. In Colorado, where I live, buying tires around the first and last snow storms of the year is more expensive since there is usually a rush to change in-and-out of snow tires.
Only use the oil weight and other fluids recommended by your manufacturer. You don’t necessarily have to go with their suggested brand, but just as with gasoline, using the incorrect type of oil and other fluids will cost you money in damage to your engine over time and lead to costly engine repair. For most vehicles, change the oil every 3,000 to 6,000 miles and other changeable fluids according to the manufacturer’s recommendations.
The Internet is loaded with additional tips for maintaining your vehicle, which can lead to some great financial savings. If you don’t share my enthusiasm for cars, don’t despair. Instead, check out my colleague Erik’s recent blog post on how to give up your automobile completely: https://www.financialfinesse.com/2016/06/23/would-you-go-carless/