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How to Cut the Cost of Driving

Gasoline prices are rising again, but fuel is just one factor in the high cost of driving an auto. Based on gas running $4 a gallon, you can drive a small sedan 15,000 miles a year for 46 cents per mile. You'll spend 76 cents a mile, or $4,541 more a year, to put 15,000 miles on a four-wheel-drive.


Many factors feed the cost of driving: financing, depreciation, maintenance, insurance, and driving habits.

Financing: Credit unions often offer the best rates on loans, but you also should compare the loan term, fees, and prepayment penalties. If the dealer offers a rebate, you may save more money by taking the rebate and financing at Denali Alaskan than taking the low-rate loan.


Depreciation: Depreciation is usually the largest part of the cost of driving: AAA estimates the average annual depreciation on a sedan driven 15,000 miles per year at $3,392. Kelley Blue Book says that after five years, the average car is worth 35% of its sticker price. But some cars, especially Honda and Acura, have much lower depreciation. Ignoring the current value of a used car can put you "upside-down" if you trade the car and pay off the loan: You owe more on the car than it's worth.


Maintenance and repair: AAA estimates the maintenance costs of sedans at about five cents per mile, which is—surprise—about half of the gasoline cost per mile.


Insurance: AAA estimates insurance expense for the average sedan at $985 per year, which would cover a 47-year-old male driver with a good record, and a short commute. Insurance for drivers who are male, younger than age 25, poor students, or have a record of moving violations and/or accidents is more expensive. Raising the deductible and reducing the maximum coverage can lower premiums but will increase your risk.


Driving habits:
* Drive defensively. Try to stay off the road late at night when most accidents occur.
* Keep tires inflated to improve mileage and cut the chance of a blowout.
* Drive mild, not wild: Accelerating slowly and coasting up to stoplights can improve gas mileage up to 30%.
* Use the cruise control to save 4% to 14% in gas.
* Drive less to save on gas, oil, maintenance, and deprecation.
* Drive less: Think about carpooling, taking public transit, biking, or walking.

Denali Alaskan can help with all your auto needs.


Copyright 2008 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.