Cars account for approximately 15%  or more of the monthly expenses for most people, and are typically the #2 highest monthly expense for people after housing.  Here are some things to consider if you would like to keep your vehicle cost under control.


  1. Consider buying used. In most cases buying a 2-3 year used vehicle with reasonable mileage (under 30,000 miles is preferred) on it and driving it for 10 years or longer will be the best financial option.  This is because the most significant loss in value occurs early with a new car.  See the related article.
  2. Buying new can work economically but you should avoid the very expensive luxury options that really drive up the price. To compete with buying used you’ll need to drive a new car much longer (10 – 15 years).
  3. Avoid leased vehicles if you are looking to get the best value. Leasing is often the most expensive option as the lessor needs to make a profit over and above the cost of the vehicle during a time when the vehicle is depreciating the fastest (early in the life).
  4. Buying a car is a significant financial decision, so please spend enough time doing some basic research before your car dies so you are not rushed to make a bad decision. Tools such as the auto buying guide at Consumer Reports or hard copy from your local library can be used to see how cars rate against others for value and reliability.  You obviously want to make sure you are not buying a maintenance heavy vehicle if you are trying to keep your costs down
  5. When buying a used car it is critical that you (a) get the car inspected by an independent mechanic of your choice before you close on the purchase, (b) check for recalls at  (enter the vehicle vin#) or and (c) get a vehicle history report from Autocheck, CarFax and / or (sometimes what shows on one of these reports might not show on the other so check more or all of them if you want to be extra safe). Also (d) check the safety features for your vehicle at and unrepaired safety recalls at
  6. When buying a car don’t be in a hurry and be willing to walk away. I have done this and you should do it too if you feel you are being treated unfairly.  Be careful of dealers that agree on a price initially and then play games (for example, by changing the value of your trade).  Firms such as and aim to take all of the stress out of the car buying process by using fixed no haggle pricing and easy pickup or delivery of vehicles.
  7. You are always better off selling your previous vehicle as a private sale vs a trade in. If you are going to trade it in have a reputable company such as  Carmax give you a free appraisal (good for 7 days) so you will have options.  Also check the internet price before going to make the purchase.  Often the internet price is lower (due to higher competition on the internet) than the in person sticker price.
  8. If leasing be careful of the mileage restrictions (compared to your expectation of how much you plan to drive plus some cushion to cover you for the unexpected) so you don’t get penalized. Make sure you read the contract carefully.  I’m not a fan of leases since it handcuffs you to a monthly payment for the life of the contract.  If you are looking to get out of your lease you can try Lease Swap,, and
  9. I have a basic excel template that you can use as a starting point to analyze different options (buy used, buy new, or lease). Run the numbers yourself to compare the options for your situation.  Click here to download the excel template.
  10. Hybrids and electric vehicles are other options to reduce your cost per mile for fuel. Both of these options get much more effective cost per mile driven ratios for the fuel cost (gas or electric).  When buying gas, however, take a moment to check your owner’s manual for the octane level that your car requires.  In most cases the car won’t require premium or the highest octane products.  In other words, don’t spend the money to put premium in your vehicle if the car manufacturer does not require it.  If you do you are just throwing your money away.  If the pump has a Top Tier rating the gas should be clean and safe to use.  You can also check out the quality of gas for a gas station by going to
  11. Gas prices can vary a fair amount between stations so it is important to pay attention to who has the best value. Apps such as Gas Buddy allow you to join an online community that reports the price of gas at various stations.  As a user you can then quickly search for the best deals on gasoline surrounding your current location.  Other ways to save gas include membership clubs (such as Costco) that sell members gas that is often 5% lower than the competition.  This often adds up to significant money over time.  There are some gas reward credit cards that offer good cash back rewards for buying gas, although there are often limitations as to which stations you can use them at.  Check out for various credit card choicesRemember that credits cards are like playing with fire so they are only a good deal if you get the rewards and pay your bill in full each month.  If you fall behind on your credit card bill the accrued interest will quickly eat up any benefit to the card and will actually hurt you financially.  Credit card rewards only work for those that can carefully manage the credit card obligation.

Welcome To SmartMoneyToolBox

Hi, my name is John. I am a CPA who has worked in both public accounting and private industry since my career began in 1990. Building financial security is a marathon - not a sprint. It’s not a get rich quick formula. If you provide the effort, SmartMoneyToolbox will supply the tools!

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