Q1. Which Of The Following Is Not A Cost Typically Associated With Owning A Car?
Option A – Fuel
Option B – Insurance
Option C – Wear And Tear Fees
Option D – Maintenance
The correct answer to this question is Option C – Wear And Tear Fees
While you own a car, a myriad of associated costs tends to chase you. Some of these include insurance, routine maintenance, cost of driver, fuel, depreciation, and others. Furthermore, there are some costs that are related to owning a car but not associated with it. “Wear and Tear fees” is one such type of cost. It’s not considered to be a part of the car-owning cost.
But do you know the reason behind it? Well, I am sure you don’t and that’s why you’re here. Keep reading to get the answer: Which Of The Following Is Not A Cost Typically Associated With Owning A Car?
Typical Costs Of Owning A Car
We all know how much money we have to spend on commuting by public transport. In metropolitan areas, the fares of public vehicles are quite higher. Several people tend to purchase their own vehicles with the hope of reducing the cost. But ultimately, they can’t since mountainous costs are also related to it.
Here is a list of all the fixed and variable costs associated with the ownership of car:
These are the costs that remain more or less the same and do not undergo changes with the passage of time. Take a look at the types of fixed costs below:
- Loan Costs: Loan costs belong to the category of car finance which comprises various financial products. These amounts allow people to acquire a car either by a single payment or an arrangement of periodical payments.
- Car Acquisition: The cost of purchasing or acquiring a car is itself a cost that is the most immediate and the most shallow cost.
- Depreciation: The annual depreciation of a car is the amount whose value diminishes per year. Normally, the value of a car is correlated to its price in the market. However, the median depreciation of a car is around 15% to 20% every year.
- Insurance: Insurance provides a financial safeguard against physical damage or bodily injury resulting from traffic collisions.
- Driving License: A driving license is legal permission to drive a car. You need to pay certain amounts to the federal government to create this document.
- Cost Of Capital: The cost of capital is the amount the car owner could have obtained if they have used the money in any other worthy investment
- Car Tax: Car taxes include the money car owners have to pay the government. This includes vehicle taxes, road taxes, vehicle excise duty, etc.
Variable costs are those that change based on the total amount of output produced. Check out the variable cost related to owning a car below:
The maintenance cost of a car includes short-term or long-term maintenance fees. Theis cost might again be unpredictable and sometimes irregular based on the age of the car.
The fuel costs depend on four factors: distance traveled, the price paid for the fuel, energy efficiency, and type of driving.
The parking cost includes the amount the user has to pay for parking their car. This is applicable to offices, shopping centers, public buildings, etc.
Toll taxes apply to bridges, tunnels, and motorways as well as for access to some specific cities like New York and Los Angeles. Again, this may vary as per the state and federal laws.
A traffic ticket or traffic fine is issued by law enforcement officials to the car owners violating the traffic laws. These fines imply the payment of a specific quantity of money which may change as per the extent of the violation and state laws.
6. Car Washes
The cost of car washes depends on the frequency of the users cleaning their cars and the price they are incurring for each cleaning.
The Explanation- Which Of The Following Is Not A Cost Typically Associated With Owning A Car?
Which Of The Following Is Not A Cost Typically Associated With Owning A Car? The answer to this question is Wear and Tear Fees. It’s not associated with owning a car. Wear and tear basically refer to the damage caused due to the normal aging of the vehicle. Basically, the Warranty contracts that car manufacturers issue highlight that damage due to wear and tear of the vehicle would not become under warranty. The most common instances are dents, scrapes, and scratches
Frequently Asked Questions (FAQs):
Generally, the Wear and Tear fees are not associated with the charges of owning a car. Although these are supposed to be repair costs.
Running costs include the expenses spent on insurance repairs, services, maintenance, fuel, depreciation losses, and interest on loan payments.
The factors one should take into account for the car leasing charges are:
• Lease term
• Mileage Cap
• Early Termination fee
• Capital Cost Reduction
• Money Factor
• Capitalized Cost
On average, the total monthly cost of owning a car is $999.50. This includes mostly car insurance fuel, and monthly car loan repayment. On the other hand, the average monthly maintenance cost is $99.
Here Is A Wrap!
Which Of The Following Is Not A Cost Typically Associated With Owning A Car? You now know the answer; it’s wear and tear fees. So I hope next time while considering the costs of owning cars, you won’t face any more confusion. It’s the car manufacturers who opt out of the damage expenses from the warranty coverage. However, in the cases where the damage is there from the beginning of the purchase, the companies will make an exception.