Know the Costs
There are many costs involved in owning and operating a vehicle, and they can be difficult to determine. The CAA divides these expenses into two main categories: variable expenses and fixed expenses.
These expenses vary depending on how often you drive your car, and include gas, maintenance and tires. With a Chevrolet Cavalier LS 2002 driven about 18,000 km a year, you can expect to pay an average of 7.75¢ per km for gas, 2.9¢ per km for maintenance and 1.6¢ per km for tires, for a total of 12.25¢ per km—which works out to $2,205 a year.
Costs such as insurance, your driver's licence, vehicle registration, financing and depreciation are costs that are incurred whether you use the car or not.
For a driver with a very good record and coverage of less than 16 km per day, the average yearly insurance for a Chevrolet Cavalier LS 2002 is $1,469.
Driver's Licence and Registration
The cost of obtaining a driver's licence starts at around $90 and car registration starts at around $255, and these costs vary according to the situation.
Depreciation is the main fixed expense to consider. A Chevrolet Cavalier LS 2002 that you keep for four years will depreciate by $3,940 per year.
What portion of your budget should you allocate to a car? Some experts suggest it shouldn't be more than 15%, but the truth is the amount can vary according to your priorities. What's certain is that you should prepare a budget before you buy a car. That way, you'll know just how much you can afford to spend based on all your other expenses.
And remember: for your budget to remain an effective tool, you need to update it from time to time as your financial situation evolves.