Smaller cars have a much smaller carbon footprint than large cars and are generally easier to manoeuvre, but down-sizing your car also makes very sound financial sense. It is the simplest way to save on fuel and other motoring expenses. Small cars also cost a lot less up front than their larger counterparts. While some people struggle with the concept of giving up their larger and roomier cars, there are at least 5 financial benefits in down-sizing your car.
Lower Buying Price
One of the key financial benefits in buying a smaller car is that they cost a lot less to buy. An SUV, for example, may cost you 2 or even 3 times as much as a small car.
If you are buying your car on finance you will save even more on a small car because you will have to borrow less and therefore pay less interest. Talk with finance providers like Dreamloans and ask them about the total interest amount you will pay on a small car versus the total amount you will pay on a larger car. You will be amazed at the saving.
The other huge saving you will make by down-sizing is in depreciation. A small car may cost you around $100 a month in depreciation while depreciation on an SUV will be around $300 each month. If you add up these fixed costs – savings on purchase price, savings on interest, and savings on depreciation – you will find you can save a lot by down-sizing.
Save on Fuel
Smaller cars have smaller engines that will use less fuel and cost you less at the bowser. Car manufacturers have worked hard to develop fuel efficient small engines that are capable of providing the power of a larger engine. With the latest engineering innovations, manufacturers can build a car with fewer cylinders and boost its performance with a turbocharger or direct injection technology. In practical terms, that means you can down-size to a small car with excellent fuel economy, without compromising performance.
Save on Registration, Insurance, Servicing and Parts
Down-sizing your car will also reap you savings on the other fixed costs of owning a car. Car registration fees are based on the number of cylinders in your car engine as well as the number of doors in your car. You will save hundreds of dollars each year in registration with the purchase of a smaller car over a larger one.
Insurance costs are based on the replacement value of your car. If you down-size and buy a smaller and cheaper car, your insurance costs will also be reduced. As insurance fees are an ongoing cost, buying a smaller car represents ongoing savings on insurance.
Servicing and Maintenance
The cost to service and maintain a smaller car is generally considerably less than for a larger car. Again, servicing costs are ongoing, so down-sizing to a smaller car will save you money over the term of car ownership. Parts for smaller cars are generally less expensive too.