High fuel prices can leave people feeling out of gas. Just how much do these purchases at the pump contribute to the cost of owning a car?

Answer: About 20%

Questions:

• The largest cost element above is depreciation. Why do you think that a new car depreciates (or loses value) over time? 
• Changing the number of miles you drive will reduce your fuel cost. Will it change any of the other costs listed above?
• Insurance estimates are based on someone with 6 years of driving experience. Do you think the cost of insurance would be lower or higher for a teen just getting their license?
• The figures above are provided for a new car. What costs do you think would be lower if you drove a used car? What costs could be higher? 

Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (AAA):

• Depreciation: Based on the difference between new-vehicle purchase price & estimated trade-in value at the end of five years & 75,000 miles.
• Finance: Based on a 5-year loan, with 10% down, at the national average interest rate. Includes taxes & the first year’s license fees (national average).
• Fuel: Based on average prices for a 12-month period ending 5/23. During this time, regular grade gas averaged $3.999/gallon. Electric vehicle charging costs are based on a rate of 15.8 cents/kilowatt hour (an increase of nearly 2 cents/kWh).
• Insurance: Based on a full coverage policy for personal use of a vehicle by a driver who is under 65 years of age, has more than 6 years of driving experience, no accidents & lives in the suburbs or city.
• License, Registration and Taxes: Includes all government taxes & fees payable at time of purchase, as well as annual fees to keep the vehicle licensed & registered (national average).
• Maintenance, Repair and Tires: Includes retail parts & labor for routine maintenance specified by the vehicle manufacturer, a comprehensive extended warranty, repairs to wear-and-tear items that require service during 5 years of operation & one set of replacement tires.

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Demonstrate why we see prices rise and fall due to supply and demand with ECON: Shortages and Surpluses

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Sharpen your students' budgeting skills with NGPF's Budgeting unit

About the Author

Mason Butts

After graduating from UCLA with a Master's in Education, Mason spent 5 years as a science educator in a South Los Angeles public high school. He is committed to supporting the holistic growth of all students and empowering them to live a life of relational, academic, and financial success. Now settled in the Bay Area, Mason enjoys facilitating professional developments and partnering with educators as they prepare students for a bright financial future. When Mason is not building curriculum or planning a training, he can be found cycling, trying new foods, and exploring the outdoors.