There are three types of motoring cost – depreciation, interest and maintaining the car on the road with car insurance, vehicle excise duty, fuel and replacement parts.
Motoring costs are rocketing so before you buy a car compare costs because once you take delivery you’ve subscribed to these fixed costs.
The moment you drive out of a showroom with a car you lose thousands in acute depreciation. But that can be reduced by negotiating a lower purchase price. In the following years you’ll probably lose about £1,500 per year in depreciation on a small/medium popular car.
Replacing parts which will inevitably wear out will cost a few hundred a year, say £500. Car insurance depends on the driver but let’s say that’s another £500. VED £100 to £200. Interest costs about £300 to £600 per £10,000 borrowed per year. You can make car insurance comparisons directly to save on your premium.
The shocker is running a small car for 12,000 miles per year can now cost £2,000 per annum. That’s the cost of 300 gallons of fuel and assumes you’re returning 40 mpg in something like a Hyundai i10.
So gassing up now costs more than depreciation or interest plus insurance plus VED plus parts. It’s probably something like 40% of annual motoring costs.
I know they’re rough figures but hopefully you can see what I mean.
Regards
Ralph
