Total Cost Of Ownership

Name _______________ Class 8 _ Careers - Financial Literacy: Cars Total Cost of Ownership The greatest car in the world can turn into a giant headache if it costs too much to run. Think of how much you’re willing to pay for a flashy ride, and how boring you can let your car be - if it’s also a good deal. Once you have bought a car, there are lots of other costs to owning a car: - When you drive them home, most cars lose between $2000 and $3000 of their value instantly, because they are no longer “new” and because car dealers are good at getting people to pay more money for cars. - A new car’s resale value can drop over $1000 a year. This is called “depreciation.” - Maintenance and repairs can be more expensive for some cars if they’re not designed to be easily worked on, or if they need work often. - Property tax on a car is paid to the state of Missouri every year. The higher the value of the car, the higher the tax you pay on it - from $15 -25 for a very old car to several hundred dollars for new ones. - Insurance is higher for new and fast cars, ranging from $500 to over $2000 a year. - Gasoline costs can range from $700 to over $1700 a year (for cars that get between 17 and 42 miles per gallon). The cost to own a car can be hard to add up, but this table tries to help. The “True Cost to Own” is how much money most people end up paying if they own a car for five yeas. The “Total Cash Price” is how much the car would cost to actually buy right now. The “Average Cost per Mile” figures that most people drive 15,000 miles a year - this is a good way to compare what the car might cost further into the future.

2003 Honda Accord 2 Dr EX V6 Coup ($13,807 private seller, $15,105 dealer) True Cost to Own (for 5 years) $34,113 

Total Cash Price

$14,961 

Average Cost per Mile $0.45

-------------------------------------------------------------------------------------------------------------2003 Pontiac Grand Prix 4 Dr SE Se ($7,273 private seller, $8,219 dealer) True Cost to Own (for 5 years) $27,873

Total Cash Price

$7,949

Average Cost per Mile $0.37

-------------------------------------------------------------------------------------------------------------2003 Ford Mustang 2 Dr GT Coupe ($11,614 private seller, $12,665 dealer) True Cost to Own (for 5 years) $37,092

Total Cash Price

$12,738

Average Cost per Mile $0.49

-------------------------------------------------------------------------------------------------------------2003 Chevrolet Venture 4 Dr Passenger Van ($6,091 private seller $6,896 dealer) True Cost to Own (for 5 years) $26,954

Total Cash Price

$6,743

Average Cost per Mile $0.36

Which vehicle costs the least to own for 5 years? ________________________ Which costs the most? ________________________ How much would a dealer probably get for a 2003 Mustang? ________________________ Why is this more than a private seller might get? ________________________ Besides buying it, what are the major costs of owning a car? ________________________ Take a guess: Why do you think the Honda and Mustang cost so much more to own than the Venture and Grand Prix? ________________________ What could you do to bring your car’s Cost of Ownership down? _______________________________________________________ ______________________________________________________ ______________________________________________________