If you’re going to purchase a new or used truck you will be paying more than ever from financing charges. Monthly costs have soared making new vehicle ownership the highest it has ever been since stats were first tracked. You may think you got an economical choice, but your expenses go well beyond fuel and maintenance.
Finance charges increased from $744 to $920 per month was fueled by a number of recent developments. That almost $200-more a month in payments comes from higher federal interest rates combined with higher truck prices. But there’s another reason.
Loan packages typically go for 72-month periods. It used to be that two- and three-year loans were the norm for truck financing. Today those are rare exceptions as 72-month payment periods keep payment lower as purchase prices rise. While keeping those payments within an acceptable range for buyers, the added months of interest means they pay more.
In fact, AAA did a study recently and found that the addition of 12 months adds $1,000 in finance charges over the life of the loan. For every year you extend payment you’ll add another $1,000.
Biggest Cost Is More Than Financing
Of all of the costs involved in vehicle ownership, depreciation is the single biggest cost. It alone accounts for 36% of the average cost per year. In dollars, it amounts to $3,334 a year. That is almost a $50 increase from last year.
Additional Costs Your Truck Costs
Fuel: The average cost of filling up the tank increased to 11.6 cents-a-mile. If you own a truck it is even more, to 15.67 cents per mile. That’s up 5% from last year. EV charging rose as well as electricity charges rose 0.1 cents per kilowatt-hour.
Maintenance and Repairs: These costs per mile rose to almost nine cents per mile. Both the complexity of new vehicles and increases in calculating repairs are both to blame for this increase. EVs came in at 6.6 cents per mile. The highest? That goes to SUVs which cost almost 10 cents a mile.
Licenses and Registration: Combined, these averaged $753 per year.
The Bad News For Truck Ownership
Based on an average of 15,000 miles driven annually pickups cost $10,839 per year to own. In comparison, a small sedan, which is cheaper to own than an EV, costs $7,114 a year on average.
Ways To Lower Monthly Costs
New truck ownership is not a hopeless exercise. These are things you can do to reduce the headaches and expenses of truck ownership. According to AAA, here are six suggestions to help you save if you’ve got to have that new truck gleaming in the showroom.
First, know how much you can afford and then stick to that figure. That goes for the cost and also the truck financing.
Get the shortest loan term. Every year added to the term will add an additional $1,000 to the cost.
When you buy matters. The last two weeks of December are the best time to buy. Why? Because dealers and manufacturers have yearly sales and production goals. The next-best time is July to October because dealers are trying to make room for the new model-year vehicles.
Dealers also have month-to-month goals. So, buying in the last weekend of the month can help you negotiate a lower cost.
You don’t have to buy a new truck. Low-mile trucks just off of two-year leases are a great alternative, and your truck financing will be less. If the lease kept yearly miles to 12,000 then the truck could be a 24,000-mile creampuff. And with model cycles lasting longer, it could still look like the most current model.
If you belong to AAA you could be eligible for dealer discounts for members. Some dealers will offset the incentive of membership-driven sales with lower purchase prices.