9 Signs a Car Will Be a Money Drain

05/05/2024

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When considering purchasing a car, it’s crucial to be aware of signs that may indicate it could become a financial burden. A vehicle, while essential for many, can quickly turn into a costly commitment if not chosen wisely.

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A survey from GOBankingRates found that the typical cost of owning a car amounts to $762 a month or $9,144 a year. That total includes monthly car payments as well as insurance, sales taxes, gasoline costs and repairs. According to Cox Automotive, the average American spends about $548 annually on just car repairs alone. Carvana notes that due to inflation, the American Automobile Association now advises setting aside approximately $60 each month for car maintenance, up from the previously suggested $50 per month.

Furthermore, a survey by MarketWatch Guides, nearly 40% of drivers admit they cannot afford necessary repairs and upgrades for their vehicles. Frequent visits to the repair shop can typically be attributed to two main issues: purchasing a problematic car, or failing to maintain it properly. Facing such unexpected major car repairs can severely undermine financial security, rapidly depleting both emergency funds and other savings.

To avoid these types of payments its best to be on the lookout for sign and key indicators which suggest that a car might drain your finances.

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High Mileage Concerns

Risk Factor: Vehicles with high mileage, typically over 100,000 miles, may necessitate more frequent and expensive repairs. Essential components like the transmission and engine might be nearing the end of their functional life.

Advice: Secure service records to verify regular maintenance and consider a detailed inspection to evaluate potential major upcoming repairs.

Poor Fuel Economy

Risk Factor: Older or larger vehicles often consume more fuel. This can significantly increase your monthly expenses, particularly with fluctuating fuel prices.

Advice: Compare the fuel economy of different models. Consider hybrid or electric vehicles for better long-term savings.

Expired Warranty

Risk Factor: Cars out of warranty put you at risk of incurring high repair costs that you must cover out of pocket.

Advice: Search for cars with transferable extended warranties or budget for an aftermarket warranty to offset unforeseen expenses.

History of Frequent Repairs

Risk Factor: A past filled with frequent repairs can indicate ongoing problems. Such vehicles might continue to be unreliable.

Advice: Access a vehicle history report and speak with a mechanic who can use past repairs to predict future issues.

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Salvage Title

Risk Factor: Vehicles with salvage titles have been declared total losses by insurance companies. They may harbor concealed damage, potentially leading to costly repairs.

Advice: Ensure a thorough professional inspection by a collision repair specialist if considering a salvage title car.

Exotic or Discontinued Makes

Risk Factor: Replacement parts for exotic or discontinued models can be prohibitively expensive or hard to find, driving up maintenance costs.

Advice: Investigate the availability and cost of parts and service for these models before committing to a purchase.

High Insurance Costs

Risk Factor: Some cars have higher insurance premiums due to factors like high market value, performance features, or poor safety ratings.

Advice: Obtain insurance quotes for potential purchases to ensure the costs fit within your budget.

Rust and Body Damage

Risk Factor: Significant rust or body damage can be expensive to repair and may indicate deeper structural issues.

Advice: Carefully inspect the vehicle’s exterior and undercarriage for signs of serious rust or damage that could lead to costly future repairs.

Recalls and Known Issues

Risk Factor: Some models are notorious for specific, costly problems or have been subject to major recalls.

Advice: Research the model’s track record for recalls and known issues. Avoid models with a history of expensive, common defects.

By keeping an eye on these signs, you can better judge whether a car is likely to be a smart purchase or a potential money pit. Always include a pre-purchase inspection by a reputable mechanic as a part of your decision-making process. This step is crucial in ensuring that you’re making a well-informed investment, providing you with peace of mind or saving you from a costly error.

Editor’s note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates’ editorial team.