Getting around – whether by taking public transportation, renting a vehicle, using ride-hailing services, or buying a car – costs money. Of these options, the most expensive is buying a vehicle. The upfront purchase price on cars gets the most attention, but before buying, people should realize that additional costs will add up over time. First, there is the interest rate associated with financing. Other costs include registration, taxes, insurance, gas, maintenance, and parking.
Registration and excise tax
Every year, vehicle owners must register their vehicle in Maine, regardless of whether the vehicle is new or used. The annual cost of registration is $35. In addition, when someone visits their Town or City Hall to pay the registration, they are charged an agent fee, usually approximately $5. To complete the registration process, car owners also must pay an excise tax on the vehicle. In Maine, the excise tax is based on the manufacturer’s suggested retail price (MSRP) of the vehicle, when it was sold new. In the first year that a car is registered, the excise tax is $24 per $1,000 of MRSP. The price declines each year of the vehicle’s life until its sixth year and subsequent years, when the charge becomes $4 per $1,000 of MSRP. So, if someone purchases a new vehicle with an MSRP of $30,000 and registers it for the first time, their total excise tax due in the first year will be $720, which is $24 x 30 ($30,000 divided by $1,000). If they were registering the vehicle for the sixth year or subsequent year, total excise tax each year will be $120, which is $4 x 30 ($30,000 divided by $1,000).
Insurance
Auto insurance protects people financially if they are involved in an accident. With insurance, the person won’t have to pay the full cost of vehicle repairs, a replacement vehicle, or medical expenses. In Maine, operating a vehicle without paying for auto insurance is against the law. The average annual cost of auto insurance in Maine is $294 for minimum insurance and $965 for full coverage. While full coverage is more expensive, having better insurance could save the vehicle owner a lot of money in the event of a total loss of property due to theft or accident.
Gasoline
The cost of fuel may seem insignificant when considering a vehicle purchase, but that cost can quickly add up. With fuel costing nearly $4 per gallon across Maine, visits to the pump can quickly break a budget. On average, people are spending $131 nationally per month on gasoline for their vehicle.
Maintenance
Keeping a vehicle running smoothly is an ongoing expense. Between oil changes, new tires, battery replacements, new windshield wipers, services, and more, car owners should budget for regular maintenance and upkeep. According to a study by AAA, a new car’s routine maintenance and repairs could cost an average of $0.09 per mile per year. For someone who drives 10,000 miles per year, that totals $900. The older the vehicle, the more costly it is to maintain. That is because parts wear down over time and need to be replaced more often than on a new vehicle.
Parking
If a vehicle owner lives in the city, they’ll need to factor parking costs into their budget. Monthly parking garage passes in Portland are around $140, with meters charging around $2.50 per hour. Car owners in rural areas likely won’t have to include these costs, but anyone living or working in the city should plan for recurring parking expenses.
The bottom line is that the advertised price of a vehicle is just one consideration when determining the expense of car ownership. Adding up the cost registration and excise tax, insurance, gasoline, maintenance, and parking can help people get a better sense of the true cost.
