AAA Analysis Case

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The American Automobile Association, better known as AAA, has updated their statistics on the true cost of owning a car, in Your Driving Costs 2015. I suspect that most people have only a vague idea of what it actually costs to own a car. Most would probably combine the annual cost of their car payments, car insurance, and a small allowance for gasoline and maintenance. That would produce a rough approximation, but probably one that falls short of the true cost. The AAA analysis is actually quite detailed, and makes generous room for such variables as the type of car owned (small, medium, or large sedan), as well as the number of miles driven. You can pretty much customize what your own cost will be on a per vehicle basis, based on the variables …show more content…

According to Gas Buddy.com, gas prices in the states located on the Gulf of Mexico are less than $2 per gallon, while they are over $3 in much of California and Nevada. Finance charges. AAA lists this expense at $665 per year, which assumes that you bought your car with a 10 percent down payment, with a five year loan and average credit. The amount you pay will vary depending upon the size of your down payment, the length of your loan, and your actual credit. Depreciation. AAA lists this is the single biggest cost of owning a car. At $3,654 it represents more than 40 percent of the annual cost. This should come as no surprise, since new cars in particular experience rapid depreciation in the early years of ownership. Though many consumers don’t think of depreciation in this way, it is very much a real cost. It represents the loss in value of the vehicle over its useful life. Cars Direct reports that on average, a new car depreciates by 20 percent as soon as you drive it off the lot, then at roughly 15 percent per year thereafter. Of course, those are just average numbers. Individual depreciation rates are based heavily on the make and model (some vehicles retain their value better than others), mileage, and even the condition of the

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