Understanding ownership costs can save you money. Regardless of what you may read in new car reviews or hear in new car ads, it’s not possible to know whether a vehicle is a good or a poor value until you learn about all the major ownership costs: depreciation, insurance, taxes and licensing, financing, fuel economy, maintenance and repairs.

For example, a higher-priced car that holds its value over the years may be a bargain compared to a lower-priced car that plunges in value over a similar time frame. In just one year depreciation could eliminate the apparent initial advantage of the car with the lower purchase price. However, even if the lower-priced vehicle holds its value well, it may still cost a fortune to insure. So which is the better value?

Here’s a more specific example. You may be told that a particular vehicle is very economical because it gets such great gas mileage. Beware! The car may get good mileage, but its economic performance in other areas is poor so its overall rating is poor when compared to other vehicles in its class.

You cannot determine the overall value of any vehicle, or the long-term savings you may realize in selecting one car over another, without considering all of the ownership costs. This knowledge will help you make informed and rational purchasing decisions based on facts and not emotions - though your desire to have that red convertible may still be the ultimate deciding factor!