What's the most expensive aspect of running your car?

When I ask people what's the most expensive aspect of running their vehicles, I get the following top 3 answers:

1. Gas

2. Repairs

3. Insurance

Guess what? All 3 are incorrect. The most expensive aspect of any new car is depreciation, something people never consider as a real cost but it is real indeed. The average depreciation for a car driven 13,000 miles per year is 20% the first year, and 12% thereafter. So a $30,000 car is worth roughly $13,000 in 5 years (if you're lucky and have no accidents, scrapes, big dings, etc.). So that's a $17,000 loss, or $3,400 per year. Gas is roughly $1500 to $2000 per year, insurance about $1000, and maintenance about $1000.

Here's more: that $17,000 has what's called "opportunity costs" meaning the cost of doing something else with that money other than paying for depreciation. So for example, in this bull stock market, $17,000 would be $34,000 in 5 years. So that shiny new car you paid $30,000 had a real cost to you of $34,000 in 5 years.

Ouch! In posts to come, we'll talk about how to avoid that financial sinkhole.