Don't Get Stuck, Choose Wisely
When you're in the market to buy a new car, there are things you think about... and other things you probably don't.
Naturally, you'll want to know how much the car will cost to buy. So Kelley Blue Book helps out with our Fair Purchase Price tool for new cars. We update our Fair Purchase Price weekly based on actual new-car transactions to show you what real people are really paying for their new car.
Let's say you've narrowed your list to two cars: Car A and Car B. They even have the same Fair Purchase Price: $19,272. So how do you choose?
We dive deep to help you tell them apart from a cost standpoint. After all, cars cost a lot more than their purchase price. When you get that car out on the road, you also need to pay for things like fuel, maintenance and insurance.
The bottom line is: Sometimes, even more expensive car could actually save you money over the first five years of ownership. Knowing the difference could help keep money in your pocket.
What gives one car a lower cost to own vs its competitors?
Some of the differences are easy to understand. If Car A gets 30 MPG and Car B gets 25 MPG, you'll have to fill up more often and spend more money at the pump with Car B.
Other differences aren't as obvious. Like depreciation. All cars start to lose their value the moment you drive them off the dealer's lot, but certain cars hold their value better than others over time.
If you trade in Car A after 5 years (the length of time many people keep their new car), it might still be worth a lot. Maybe we're projecting there will be a huge market for 5-year-old Car As and dealers and private buyers will be clamoring to get their hands on one.
Car B may not be so lucky. It's still in great condition; it has the same number of miles on it; but the market for Car Bs isn't predicted to be as strong in 5 years.
How do we know? We're experts in this type of information. With more than 85 years in the car business and access to incredible amounts of data, there may be no better source than Kelley Blue Book for figuring out long term values and day-to-day costs.
What if I don't keep the car for 5 years?
Of course, in order to provide a good "apples-to-apples" comparison, we had to make a few assumptions. The biggest one, probably, is that we show 5-year cost to own – that is, that you'll own the car for 5 years then sell it (or trade it in) for another car.
Since the largest depreciation happens in the first three years, people who buy a new car frequently should pay special attention to depreciation.
In the same way, other ownership factors might matter more to you, depending on how you use the car – and where you live.
Drive more than 15,000 miles? The impact of fuel economy is greater. Got a bad driving record? You'll probably pay more for insurance than our average. Independently wealthy? You won't need to worry about financing.
This is all to say that Kelley Blue Book's 5-Year Cost of Ownership is great measurement when comparing new cars, but, as they say in the car commercials, "Your mileage may vary."
Where can I see a car's 5-Year Cost to Own?
You'll find it throughout kbb.com. Simply choose "What Should I Pay for a New Car" and "5-Year Cost to Own" is clearly displayed to the left of our pricing information.
In addition, we help you compare 5-Year Cost to Own among different cars and show you the ones with the lowest 5-year Cost to Own in a variety of categories and segments.
In 2012, we even started giving awards for the cars with the lowest ownership costs - the 5-Year Cost to Own Awards. Find the latest winners, here.
Fair Market Value and 5-Year Cost to Own are just two of the ways kbb.com helps you make an informed, confident decision when buying your next new car. No wonder we've been The Trusted Resource for consumers and the auto industry alike since 1926.