When buying a used car, smart consumers recognize that hidden used car costs make the decision-making process more than simply getting a competitive price or a low monthly payment. Comparing vehicles based on selling prices and payment quotes is just one way to determine whether a vehicle will prove affordable during ownership. In addition to price and payment, variables that impact the total cost of buying and owning a used car include:

  • Cost to insure the vehicle
  • Fuel economy estimates
  • Maintenance and repair costs
  • Vehicle depreciation

To ensure your used car, truck or SUV provides maximum value at minimum cost, it is important to consider all hidden used car costs.

Insurance Premiums

Car insurance is one of the most expensive elements of vehicle ownership, and policy premiums depend on several factors, starting with the type of policy and the amount of coverage it offers. Insurance premium costs are also based on the car owner's driving record, age, marital status and retirement status. Other factors include the car owner's region of residence, whether the vehicle is garaged at night and the number of miles the vehicle is driven each year.

Insurance premiums also depend on the type and age of the vehicle. Costs vary among makes and models, and between body styles and trim levels of the same model. Typically, the newer and more performance-oriented the vehicle, the more costly it is to insure.

Insure.com issues an annual list of the least expensive models to insure. Using a search engine, we found the company's list from 2009. It included the following models (listed in alphabetical order):

When deciding which used vehicle to buy, smart consumers will investigate the cost to insure the vehicles under consideration. Even after choosing a model, be sure to check insurance rates between different trim levels and powertrain choices. Also, don't forget that increasing the amount of the deductible for the policy can help reduce premiums. The deductible is the amount of money the car owner will pay for repairs and expenses before the insurance company starts to pay.

Fuel Economy Ratings

As we've learned during the past decade, fuel prices fluctuate regularly. When they spike, the increase can have a detrimental effect on a household budget. Keeping this in mind, consumers should weigh their options when buying a vehicle, calculating the savings offered by alternative powertrain choices or the costs associated with upgrading to a larger, more powerful engine.

Let's use the 2010 Ford Fusion to illustrate this recommendation, because the Fusion was originally offered with a 4-cylinder gasoline engine, a choice between two V6 engines and a gas/electric hybrid powertrain. We'll also use a national fuel price of $3.29 per gallon, which is what GasBuddy.com says is the average price as this article is written.

A national AutoTrader search of used 2010 Ford Fusion models with a 4-cylinder engine shows that this model costs, on average, $14,900. The combined fuel economy rating is 25 mpg with an automatic transmission, which translates to an annual fuel cost of $1,974 when the car is driven 15,000 miles per year.

In 2010, the Ford Fusion was also available with a choice between two V6 engines paired with front- or all-wheel drive. The current market value for Fusion V6 models averages $17,200, and the average combined fuel economy rating is 21 mpg. A Fusion V6 driven 15,000 miles annually burns about $2,350 of unleaded gas every year.

Choose a 2010 Ford Fusion Hybrid and you're going to pay about $18,795. The Fusion Hybrid's combined fuel economy rating is 39 mpg, resulting in $1,265 in annual fuel costs over 15,000 miles of driving.

Based on Fusion models for sale today, the Fusion Hybrid is $3,895 more expensive than a Fusion with a 4-cylinder engine. However, the Fusion Hybrid also saves $708.62 annually in fuel expenses, so its price premium swings the overall value equation from negative to positive territory after five and a half years of ownership.

Comparing the Fusion Hybrid to a Fusion V6, the value equation is more compelling. The hybrid model saves $1,084.62 annually compared to the V6 model and costs just $1,595 more, on average, to buy. That means the Fusion Hybrid starts saving its owner money after just one and a half years of ownership, compared to a Fusion with a V6 engine.

Now compare the Fusion 4-cylinder with the Fusion V6. Not only is it $2,300 less expensive to purchase, it saves $376 annually in fuel expenses. During the first five years of ownership, that's $4,180 extra for a buyer of the Fusion 4-cylinder.

Maintenance and Repair

Modern cars do not require as much maintenance and repair as older vehicles did when they were new, and these improvements in vehicle dependability allow many automakers to offer appealing certified pre-owned (CPO) programs for late-model, low-mileage used cars. These CPO programs typically extend the vehicle's original warranty coverage, provide free roadside assistance and offer additional perks previously unavailable for used cars.

For example, car buyers choosing a CPO Hyundai model enjoy the original 5-year/60,000-mile bumper-to-bumper warranty and the 10-year/100,000-mile powertrain warranty, based on the vehicle's original in-service date, combined with unlimited roadside assistance for 10 years with no mileage limit. Additionally, if a CPO Hyundai does break down, the company pays for the first day of car rental expenses.

General Motors also offers an impressive CPO program, including a 12-month/12,000-mile comprehensive warranty in addition to the original 5-year/100,000-mile powertrain warranty. Additionally, GM offers a 2-year/30,000-mile free scheduled maintenance plan and 24-hour roadside assistance with a free rental car for the duration of the powertrain warranty. Plus, if you decide you don't like the car within three days and 150 miles of driving, you can exchange it for another vehicle without penalty.

Used cars sold by private owners are typically less expensive than a CPO vehicle sold at a new-car dealership, but they also don't offer the extended coverage and perks common with CPO programs. Also, because used cars start requiring additional maintenance and repair as they age, consumers need to factor these extra costs into their decision making. Good sources for this information include KBB.com and RepairPal.com.

Generally, it is better to buy a newer car that is less costly to maintain than an older one that is more expensive to maintain. Similarly, it is better to buy one with a longer warranty than a shorter one to protect against large repair bills in the future. It's also better to select a model that will be less expensive to maintain and repair.

Depreciation

Depreciation refers to the amount of value a vehicle loses each year following purchase. Some models hold their value better than others. A used car that has lost more of its value over time can save a consumer money, but it is important to consider all variables to determine whether a lower price truly saves money or not.

For example, as this article is written, AutoTrader shows that the average national asking price for a 2011 Chrysler 200 Sedan is $16,468. Compare that to $20,024 for a 2011 Honda Accord Sedan. The Chrysler is, on average, $3,556 cheaper than the Honda.

The Chrysler looks like a terrific bargain, especially since it receives a better reliability rating from Consumer Reports, is protected by a better CPO program and is $55 less expensive to insure annually. Delve deeper, however, and you find that the Accord is more fuel efficient and less expensive to maintain and repair over time, saving an owner $230.30 annually at the gas pump and $807 in mechanic's bills through 2015.

Add the likelihood that the Accord will remain more fuel efficient, less expensive to repair and maintain and better able to retain its value over many years of ownership, and the Honda likely proves to be the more cost-effective vehicle over time -- even if the original purchase price amounts to thousands more than the Chrysler.

Used car buyers also must be sure to perform a vehicle identification number (VIN) check through a third-party company such as CARFAX or AutoCheck. Using the car's VIN, either company can provide a vehicle history report that reveals whether the used car in question has been previously declared a loss by an insurance company and is a "salvage vehicle." Such models are typically inexpensive to buy but are also difficult to sell and do not retain their value. Unscrupulous sellers may not disclose this information to you. If you unknowingly purchase such a vehicle, you could lose thousands of dollars.

Insurance costs based on 2013 models on Insure.com

Fuel costs based on $3.29 national average for unleaded, according to GasBuddy.com

Maintenance and repair costs based on 5-year Cost to Own data from KBB.com

Summing Up

Too often, used car shoppers focus solely on price and payment when buying a used car. But there are several additional factors critical to determining the overall cost of owning a vehicle over time. When deciding between different models or trim levels within a model series, it is important to consider these variables as you decide which used car, truck or SUV best fits your budget.

author photo

Christian Wardlaw is passionate about the cars, trucks, and SUVs people actually buy, not the models about which they fantasize. An industry veteran and former editor-in-chief of Edmunds.com, this father of 4 loves to inform and entertain everyday car buyers.

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