Key Takeaways
- Most cars come with a basic warranty package, but an extended warranty option costs extra and isn’t necessarily worth the money.
- The average vehicle’s lifetime is eight years or 150,000 miles and on average, costs $914 to maintain per year.
- If you pay your car off after five years, and you continue to save the same monthly car payment over the last three years, you can use that money to help pay for your next vehicle, pay down debt, or save for other goals you have.
Benjamin Franklin’s wisdom definitely applies to how you should approach your vehicle’s maintenance!
According to Consumer Reports, the average car payment for a new car is $482 a month over five years, and that comes with a basic warranty of three years, 36,000 miles for bumper to bumper coverage. Then there’s a warranty for five to seven years for the powertrain that takes care of the engine, the drive train, transmission, and other vital parts of the car. That’s all for a basic warranty.
You have the option to get an extended warranty. According to Consumer Reports, the average cost is $1200, upfront. However, only 45% of those with extended warranties, use them. They get, on average, about $837 back. It doesn’t quite break even, so it may not be worth paying for one.
Consumer Reports says the average vehicle lasts about eight years or 150,000 miles. According to AAA, the average cost of maintaining a vehicle over that eight-year lifetime is $914 a year.
That brings up the point that if you can get beyond those five years of car payments, you can then save the $482 a month car payment you had, over those last three years. That’s $17,352. When you get to the eighth year, and now you need a new vehicle, that money, along with the trade-in value of your vehicle, can go toward your next car. That money might not be enough to cover a new vehicle, there may still be a small payment. However, it probably would cover the cost of a used vehicle, and then you wouldn’t have any payments for the life of that vehicle.
The money you save from not having any car payments could be used toward your next vehicle, paying down student debt, saving for a home, or any other savings goals or debt repayment you want to put that money toward. It’s important to look at maintaining your car well for that eight-year period, and beyond, so your car is in good shape, and so are your finances!
Until next time, enjoy!
Gary
