Save Thousands Car Buying by Researching Cost of Ownership

cost of ownership

If you are like most Americans, you have started shopping online more and more.

But online shopping isn’t just limited to food deliveries, grocery shopping, or clothing. About 36% of all cars purchased in the U.S. are purchased online, and a whopping 86% of car shoppers start their search online.

About 15 years ago, before vehicle shopping was as available as it is today, I was looking to purchase a car. We needed another vehicle, so we went looking for a car and I was extremely impressed with, the Cadillac CTS-V Coupe.

It was fast, sleek, and fuel-efficient. But I couldn’t afford a new one, so I was looking at two or three-year-old vehicles so that I could fit it into my budget.

In the process of looking at the cars on the lot, the salesman unwittingly talked me out of buying a car completely! He tried to talk me out of the Cadillac and into a Taurus by telling me about the cost of ownership.

Like most people, the first thing I looked at was price. How much car can I afford and what features are included?

Ofcourse, how much you can afford definitely factors into the decision, but the salesman got me thinking — what about the cost of ownership?

Comparing vehicle costs

For example, let’s say you can afford and want a 2020 Cadillac Escalade. Along with the perceived prestige of owning one, there are other factors that should be taken into account.

There are times when paying for high quality is worth it. A good, quality car will last, making your cost of ownership fall over time. But that isn’t always the case.

Something that costs more isn’t always better made. The base model Cadillac Escalade has an MSRP of $76,000, according to vehicle comparison site

The Escalade is a good car with loads of room for the kids or cargo. It gets 17 miles per gallon, which isn’t bad for a full-sized SUV, and it has some genuinely nice features.

But, what about the 2020 Chevy Tahoe?  At just under $47,000 MSRP it is a little under half the price with similar features, cargo space, and fuel mileage.

Yet the manufacturer’s suggested retail price isn’t the only difference. Even though the Tahoe isn’t as prestigious as the Escalade, the cost to the owner is an estimated $62,176 on average over a five-year period, reports car comparison site

In comparison, the cost of owning the Escalade is a whopping $95,542 over those same five year period. Based on just the price of the car you would spend enough owning to purchase another car outright.

2020 Best Retained Value by Vehicle


The cost of ownership numbers includes the depreciation of the vehicle. For the Escalade, a little over half of the cost of ownership is lost through depreciation at $57,500.

The Tahoe, at half of the cost of the Escalade, loses just $31,500 in depreciation. Also included in the cost of ownership are out of pocket expenses that include fuel, insurance, financing, state fees, maintenance, and repairs.

If you live in a state with sales tax, you will spend 39% more just in taxes. Of all these expenses, only maintenance is about the same for both cars, which makes sense since each vehicle is manufactured by basically the same company. The Tahoe is also the lowest cost to own amongst full-size SUVs.

This isn’t an advertisement for the Tahoe, but rather just a side-by-side comparison example. You can do this for the Ford Explorer versus the Lincoln Navigator. You can do this for any make, model, and size of the car.

In fact, has an online calculator that allows you to head-to-head compare any car you want. It’s based on a common set of assumptions, which are:

  • Ownership expenses are estimated for a five-year period
  • You will drive 15,000 miles per year
  • You are financing the vehicle using traditional financing, not lease financing
  • You have an above-average credit rating for the purpose of determining your finance rate
  • You are making a 10% down payment on the vehicle at purchase
  • Your loan term is 60 months

Next time you car shop, consider taking the savings from the lower cost of ownership and put it toward investments. You might just earn back some of that 50% depreciation.

Recommended Articles

5 Franchises You Can Buy for Less Than $80K

A convenient way to start a business is through a franchise. There is an already built-in business model, consumer base, and operational supply chain. However, if you join a globally-known

How to Encourage Loved Ones to Adopt Healthy Eating

It’s painful to watch loved ones suffering with chronic health problems, such as food intolerances, headaches, allergies, digestive pain and menstrual issues. We wish there was something we could do

How to Retire 15 Years from Today

Retirement planning should ideally begin from the day you have your first job. However, even if you have made no special financial preparations for your retirement, you could still start

The Cost of Owning a Pet Can Be Surprising, So Plan Ahead

A cat or dog can be cute, cuddly, and great for companionship. Yet the cost of owning a pet can be surprising. Pets are living beings that must be taken

Dump Growth Stocks for Value? Market Weighing Options

In this article I make a brief comparison of growth stocks versus value stocks, a topic often addressed by the mainstream financial media.Growth stocks typically offer a substantially higher growth

7 Countries Where You’ll Find Bugs On the Menu

Creepy, crawly, gross, slimy. There are several ways to describe bugs, but here in the United States, few of us would use the words “delicious” or “yummy” when talking about

Get Rich Slowly with a Slick Dividend Reinvestment Strategy

The time-tested wisdom from leading value investors has always been that if you want to make money in the stock market, invest in high quality stocks and do not sell

A Surprising Way to Get Health Benefits from Coffee

You may have heard of green coffee bean extract for weight loss, but this potent natural remedy offers other important benefits, too. Read on to discover how green coffee bean

4 Ways to Make Extra Cash Using Your Car

Owning a car does not necessarily have to be an expensive proposition. While you cannot avoid paying the auto loan installments or the car insurance and maintenance costs, you can

Paid Not to Work: How Universal Basic Income Might Compensate for Coming Job Losses

The unemployment rate for the United States represents only the amount of people who are unemployed and also actively looking for work. Separately, the workforce participation rate includes Americans were unemployed

Meet the People Who Built or Inherited Fortunes — Then Lost It All

It’s amazing how much money rules our lives. The average person will barely make $1 million over the course of a working lifetime. Meanwhile, in the United States and all

Luxury Used Cars You Can Buy Cheap and Almost New

Looking for a luxury used car you can buy cheap? Careful what you wish for. First-time owners of luxury vehicles don’t always appreciate maintenance and repair costs. Uninformed buyers may