In today's vehicle market, where prices are still high and interest rates are at a 20-year peak, the decision to purchase a car demands more careful consideration than ever before.
While the sticker price and monthly loan payments may be your primary considerations in the car buying process, it’s important to not overlook the many hidden expenses that can inflate your overall ownership costs. From insurance premiums and maintenance fees to fuel expenses and depreciation, these additional costs can quickly add up. However, fully understanding all of these extra expenses can help you make smarter purchasing decisions, reducing the overall impact on your financial wellbeing.
In this blog, we'll explore the full spectrum of hidden costs associated with car ownership in West Virginia, equipping you with the knowledge to make a well-informed purchase that leaves room in your budget for other important financial goals.
The Initial Price Tag is Just the Beginning
Just like when you purchase a home, the purchase price of a vehicle is only one portion of your out-of-pocket costs for vehicle ownership.
With the average sticker price of a new vehicle coming in at $48,000, and average car payments of around $700 a month, understanding what you’ll actually end up paying is key to figuring out a new car budget that you can reasonably afford. And while buying used can save a lot, even a used vehicle in West Virgnia is $33,700 on average—in part because Mountaineers tend to go for pricier and larger vehicles like the Ford F-150.
However, the sticker price or the MSRP (Manufacturer Suggested Retail Price) is usually not what you’ll end up paying to drive your car off the lot. Car dealerships often use a term for actual costs—the “out the door” price—which includes additional charges like extended warranties, upgrades like fabric sealants, VIN etching, or paint coatings, dealer prep fees and other dealer fees, and, of course, taxes. While some of these added costs can be negotiated, your out-the-door price (OTD) will often be higher than the MSRP.
In West Virginia, car purchase fees from the DMV include “a $15 title fee, 6% titling sales tax on vehicles with a net purchase price over $500 or $30 on vehicles with a net purchase price under $500, $10 lien fee (if applicable), and the registration fee and/or registration transfer fee.” It’s important to note that out-of-state car buyers will not have to pay the 6% sales tax in West Virginia, making it a popular choice for car purchasers from Ohio, Pennsylvania, Maryland, Kentucky, and Virginia.
To make a vehicle purchase more affordable—especially in times of higher interest rates on loans—buyers can aim to put a higher percentage down for their down payment by either saving more money for their purchase or choosing a lower-cost vehicle.
Regular Maintenance — The Costs that Keep Coming
After you drive your vehicle home, costs will continue to arise—even if your car has a solid warranty. Let’s take a look at common maintenance expenses that you’ll expect to pay for your new or used vehicle.
Oil Changes
Some vehicle manufacturers do provide limited routine maintenance for a short period after purchase, usually 1-3 years. However, this perk is not always standard, and may come at an extra charge upfront that may not be worth the cost.
Regardless of whether or not your basic maintenance is free, regular oil changes are crucial and typically needed every 3,000 to 5,000 miles. And even before the 1,000 mile mark, or after your engine has been “broken in.” Skipping oil changes can lead to grimy buildup in your engine, causing it to work harder, overheat, or even fail, which could cost thousands to repair.
Cost: Expect to pay $35-$75 for a standard oil change, and more for premium synthetic oil.
Tire Rotations
You should plan to rotate your tires every 6,000 miles to prevent uneven wear and make them last longer. Again, some manufacturers will cover certain standard maintenance items, like rotating tires. Tire rotation can also be requested at inspected, but because inspection is only required every 24 months in West Virginia, you will likely need to rotate your tires in between.
Cost: Tire rotation typically starts at $60, though some places throw in free rotations with a tire purchase or other repair.
Brake Pads
Car warranties usually don’t cover brake pads, so after driving a year or so over the hills of West Virginia, you’ll probably need to get yours replaced. In fact, brake pads are usually in need of replacement every 30,000 to 70,000 miles—depending on your driving habits and road conditions. Worn-out brake pads can dangerously increase the time and distance it takes to stop your car, and ignoring the wear can lead to more expensive repairs like replacing the rotors.
Cost: According to Kelley Blue Book, costs are usually around $150-$300 per axle, and more if you drive a heavy-duty truck.
Save Money with DIY Maintenance
For those with a bit of car knowledge, a limited or no warranty, and the right tools, performing regular maintenance like oil changes, tire rotations, and brake pad replacements can save money. Doing the work yourself can allow you to shop around for parts, in addition to saving on labor costs.
But, if you are inexperienced or your car is under warranty, take caution. A mistake could end up costing more than what you would save. And, as always when you work on any expensive equipment, be sure you’re following your vehicle's specific guidelines and safety procedures.
Unexpected Repairs — When Things Go Wrong
Whether you drive off the lot with a shiny new model, a certified pre-owned (CPO) vehicle, or a used car with a history, each choice comes with its own set of financial considerations beyond the initial purchase price.
New Cars
With new cars, the likelihood of needing significant unexpected repairs is low, thanks to the warranty coverage that accompanies a new vehicle purchase. Unfortunately, once your vehicle warranty expires, or should an issue arise outside of warranty terms, the cost of parts and labor for a newer vehicle is typically higher due to the latest technologies and specialized equipment required. Routine maintenance can help reduce the need for repairs, but won’t entirely eliminate them over the life of the vehicle. If you plan on keeping your ride for five years or more, consider selecting a vehicle with a lower cost of ownership.
Certified Pre-Owned Cars
CPO vehicles offer a middle ground, with manufacturers often extending the original warranty to cover many potential issues. While the inspection and certification process greatly reduces the risk of early unexpected repairs, CPO buyers might still encounter costs once the warranty expires. Repair costs will depend on the age, condition, and quality of the vehicle, so it’s still important to select your model with care to reduce out-of-pocket expenses.
Used Cars
Used car owners tend to face the greatest risk of unexpected repairs, as these vehicles often come with no warranty and may have a varied maintenance history that may be hard to pin down. These costs can be a mixed bag: older parts are generally cheaper, but if you're buying an older car that's out of production, scarcity can drive up prices. Additionally, the wear and tear on a used car might lead to more frequent repairs—and at some point the cost of maintaining a vehicle can exceed its value.
Always Set Aside Funds for Repairs/Replacement
No matter how new your vehicle is, it’s wise to start a savings fund to cover the cost of emergency repairs and eventual replacement.
Ideally, your fund's size should reflect the car's age and warranty status—a larger fund for an older, used car with no warranty, and a smaller one for a newer or CPO vehicle still under warranty coverage. Anticipating these repairs and preparing financially can help smooth out the bumps in your car ownership journey, ensuring that an unexpected mechanical hiccup doesn't stall your finances.
If possible, continue to build the funds in the account, even once you’ve reached your goal amount. These savings can be used for a down payment for or the purchase of a new vehicle when the time comes, reducing your need for financing!
Insurance Premiums — Mandatory but Variable
In West Virginia, the Insurance Commissioner has strict requirements for motor vehicle car insurance. These include:
- Liability Coverage Minimums: West Virginia mandates a minimum liability coverage of $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $25,000 for property damage per accident. These are often referred to as 25/50/25 coverage.
- Uninsured Motorist Coverage: The state also requires uninsured motorist coverage with the same minimums as liability coverage. Optional higher limits are available for uninsured motorist coverage up to $100,000 per person and $300,000 per accident for bodily injury, and a maximum of $50,000 for property damage.
- Proof of Insurance: Drivers must always carry proof of insurance in their vehicles and present it during traffic stops or vehicle crash investigations.
- Insurance Verification: West Virginia employs an electronic insurance verification system to check insurance status in real-time during vehicle registration, traffic citations, crashes, and conducts monthly checks on all registered vehicles.
There are penalties for not adhering to these insurance requirements, including possible suspension of driving privileges and vehicle registration. It’s also important to note, if you’re purchasing a vehicle with a loan, you may have additional requirements you need to fulfill for your lender.
For our Maryland customer residents, you can find more information about Maryland Insurance here.
How Insurance Rates Are Determined
As we mentioned above, insurance rates can be highly variable. If you’re wondering why you’re paying more than a friend or family member, there could be a number of factors coming into play:
- Vehicle Type: Insurers consider the car's make, model, and age. Newer, more expensive cars or those that are more likely to be stolen will have higher premiums.
- Driving Record: A clean driving record typically results in lower rates, while accidents and traffic violations can increase your premiums.
- Location: Where you live and park your car can impact your insurance costs. High-theft areas or locations with more traffic may lead to higher rates.
- Usage: The more you drive, the higher the risk of an incident. Therefore, those with a higher annual mileage may see higher insurance costs.
- Driver Demographics: Factors such as age, gender, and marital status can affect rates. For example, young male drivers often face higher premiums.
- Credit Score: Many insurers use credit scores to help predict the risk of filing a claim, with lower scores potentially leading to higher premiums.
Strategies for Minimizing Insurance Costs
Looking to reduce this major ongoing expense? While you can’t entirely eliminate insurance costs, there are three major ways you can decrease the cost—while maintaining adequate coverage.
- Shop Around: Get quotes from multiple insurance providers to find the best rate for the coverage you need.
- Bundle Policies: If you have multiple insurance policies (home, life, multiple vehicles), bundling them with one insurer can often provide a discount.
- Maintain a Good Driving Record: Drive safely to avoid accidents and traffic violations, which can increase your rates.
If you drive a newer or more expensive car, it isn’t advisable to simply reduce coverage to state minimums. If your vehicle is otherwise damaged, it may end up costing you significantly more for repairs or replacement.
And, perhaps more importantly, premiums with better coverage can protect yourself and your loved ones. Because West Virginia only requires coverage of $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $25,000 for property damage per accident, one bad accident could leave you or your family in financial ruin that could affect you for years to come—especially if injuries result in a loss of work. Rather than choose less coverage, consider other methods to save on insurance.
Fuel Consumption — The Ongoing Expense
Gas prices in West Virginia trend just a little below the national average—but not enough that fuel consumption shouldn’t be a major consideration when looking at ways to save money. In fact, Americans spend about $5,000 a year on gas, and more if their vehicle is larger or less fuel efficient. If you’re buying a new car, consider that money saved on gas each year could help build your emergency repair fund—or even pay for your next vehicle down the line entirely.
Things like aggressive driving, speeding, traffic jams/idling, and even using air conditioning can eat into your MPG. Additionally, roof racks, towing, and other items that kill your vehicle’s aerodynamics can have a huge impact on your use of fuel. In fact, Car & Driver found that roof racks alone can decrease your fuel economy by 3 miles per gallon.
Comparing Fuel Costs for Different Types of Vehicles
Depending on your needs and driving conditions, you may be able to save significantly on gas by choosing a more fuel-efficient option.
- Hybrids: Hybrid vehicles combine a gasoline engine with an electric motor, offering better fuel economy, especially in stop-and-go traffic.
- Electric Vehicles (EVs): EVs have no gasoline costs but do incur electricity charges for charging the battery. However, they are generally cheaper to 'fuel' per mile compared to gasoline vehicles and often have much lower maintenance costs.
- Compact Cars vs. SUVs/Trucks: Smaller cars usually offer better fuel efficiency than larger SUVs or trucks due to their lighter weight and smaller engines. However, cars with more horsepower or larger hybrid vehicles can flip the script on this fuel economy rule of thumb.
- Engine Size and Vehicle Age: Vehicles with larger engines consume more fuel. Additionally, newer models are typically designed to be more fuel-efficient than older vehicles. Sometimes there can be significant increases in fuel economy from one model year to the next!
Ongoing Fees
In West Virginia, many state fees are only required every two years, though you can often choose to pay them once a year instead.
Registration fees vary based on the size of vehicle, and the license plate you choose—but most individuals will pay $51.50 a year (2024). Individuals who choose to drive fuel-efficient vehicles are penalized with additional registration fees to they pay on gas which are used for road repairs. While discouraging, it’s important to note these fees are minimal compared to annual fuel savings. For a complete breakdown of registration and plate fees, check out the WV Motor Vehicle Registration Fees Brochure.
Though each inspection station may have its own fees for conducting inspections—and necessary repairs will widely range—the cost of an inspection sticker is only $19, and inspection is only required every 24 months.
Maryland residents can find more information about ownership and purchasing fees here from the Maryland Motor Vehicle Administration: MVA Fee Listing - Pages (maryland.gov).
Depreciation — The Silent Value Killer
Depreciation, the gradual loss of a vehicle's value over time, is an often underestimated aspect of car ownership costs. It begins the moment you drive a new car off the dealership lot and continues at varying rates throughout the life of the vehicle. Factors include the car’s make and model, market conditions, mileage, condition, and even color.
New cars can lose more than 20% of their value in the first year. Luxury cars and more expensive vehicles tend to depreciate faster than economy cars. Depreciation continues at an average rate of 15-25% per year over the next four years. After five years, a car may retain only about 40% of its initial value. Looking at cars that are a few years old can help you cut your upfront costs, as well as minimize depreciation losses.
More Tips on How to Minimize Depreciation
Beyond simply buying an older model, there are a few additional strategies you can use to decrease depreciation:
- Choose Models Known for Retaining Value: Research and buy cars that have a reputation for depreciating slowly. Certain brands and models are known for their longevity and reliability, which helps them hold value.
- Maintain Your Vehicle: Keep your car in good condition with regular maintenance. Keep a record of all services as proof of upkeep.
- Watch the Mileage: The more miles a car has, the less it's worth. Try to keep mileage low to help maintain its value.
- Opt for Popular Features: Certain features, like high fuel efficiency, popular tech upgrades, and universal color choices, can make a car more appealing at resale time.
- Avoid Modifications: Custom modifications can negatively affect resale value. Keep your car as close to its original condition as possible.
Financing Costs — The Price of Borrowing Money
Finally, it’s important to consider the out-of-pocket costs of financing. With high sticker prices, it is getting harder and harder to pay for a new or relatively new vehicle upfront. In America, 80% of new cars are purchased with financing. But even with higher interest rates, it can be possible to reduce your financing charges.
Calculate Finance Costs
First, take the time to understand financing costs so you can set a more realistic budget. Doing so before you shop for vehicles can help reduce the pressure on the lot. To calculate the true cost of a car loan, you'll need to consider the principal amount, the interest rate, and the term of the loan. Here's a simple way to understand the calculation:
- Principal: This is the total amount you're borrowing, which may include the price of the car minus any down payment and trade-in value.
- Interest: The annual percentage rate (APR) will determine how much extra you pay on top of the principal. A higher APR increases the total cost of buying a car.
- Loan Term: The length of the loan affects how much interest you'll pay. Shorter terms have higher monthly payments but lower total interest, while longer terms have lower monthly payments but higher total interest costs.
For Example: If you finance $20,000 with a 5% APR for 60 months, your monthly payment would be about $377. However, over the life of the loan, you'll pay $2,620 in interest, making the total cost of the car $22,620.
Ways to Reduce Out-of-Pocket Vehicle Loan Expenses
- Improve Your Credit Score: Before applying for a car loan, make some efforts to improve your credit score, like reducing the balances on credit cards. A higher credit score can qualify you for lower interest rates, reducing your overall financing costs.
- Make a Larger Down Payment: By making a larger down payment, you reduce the principal amount you need to borrow. This can lead to lower interest charges over the life of the loan and potentially qualify you for better loan terms.
- Shop Around for the Best Rates: Don’t just accept whatever the dealer offers. Reaching out to multiple lenders, including local banks, can help you find the best rate and terms for your needs.
Find Your Affordable Vehicle Financing at JSB
At Jefferson Savings Bank, we work hard to set ourselves apart from other lenders, taking the time to understand your vehicle loan needs and working to find an affordable loan that fits into your financial picture. And when you get preapproved for a new or used vehicle loan with us, you can walk into the dealership with confidence, knowing your spending limit in advance, and never having to worry about surprise financing fees.
Want to learn more about our ? Visit any of our convenient locations in Shepherdstown, Inwood, Martinsburg, or Charles Town, West Virginia or to speak directly with a loan officer—or call us 304-876-9000. Ready to apply for your loan? Our online application is fast and easy!