The True Costs of Car Ownership

My wife and I have two cars: a 2000 Plymouth Neon, and a 2005 Jeep Liberty. We paid off the Neon back in 2001 or 2002, and it's been a dependable commuter car for me to drive to work. Our Liberty, on the other hand, is a nice vehicle, but we've decided to sell it. Why? Well, for one thing, we're upside down in our loan.

On the Liberty, we took out a 5 1/2 year loan for just over $18,000 back in 2006. We've paid it down to $13,500, but it's only worth about $11,000. We're upside down in the loan. Not only that, our newer, larger automobile has been more expensive in the following areas:

• Gas / fuel economy
• Maintenance
• Registration

Gas / Fuel Economy
According to Kelly Blue Book, our Neon is rated for 25 mpg for city driving. The Liberty is rated at 17 mpg for city driving. That's a difference of 8 miles per gallon. In other words, I could drive the Neon 100 miles on four gallons of gas, but it would require almost four gallons of gas to drive the Liberty the same 100 miles.

Maintenance
Both of our cars are gas-powered and in the four to six cylinder range, so costs the same to have the oil changed on either automobile. Tires, on the other hand, are larger and more expensive for the Liberty. At my local tire shop, I recently paid $100 per tire for the Liberty. Last time I put tires on the Neon, they only cost $70 per tire (not including wheel balancing, labor and alignment). For new tires alone, it's $120 cheaper for the Neon.

Registration
Our Neon only costs $118 for its yearly registration. Our Liberty, on the other hand, costs $188 per year. That's a difference of $70. State automobile registration is based on the current market value of the vehicle.

Conclusion
If you're in the market for your next car, remember to weigh in the true costs of ownership. These costs (new tires, alignment, etc.) are usually incurred when registration and inspection are due. Factor in these maintenance expenses, and you'll be able to make a better decision on your next car purchase.