How to Calculate the Running Cost of Your Car

Most people who purchase a car spend a lot of time crunching numbers to determine how much the vehicle will cost each month. They might even take into account things like the on-going expense of car insurance. However, few people take the time and effort to break down how much it actually costs to run the vehicle. There are several factors that you should look at in order to accurately calculate the running cost of your car.

Mileage Matters

Because it is one of the most visible and recurring expenses associated with owning and operating a vehicle, it makes sense to start with mileage and the cost of petrol. There are numerous ways to look at your car’s mileage, but it doesn’t have to be complicated. In fact, determining mileage can be as simple as filling up your tank and then setting your car’s mileage counter. When you refill the tank again, you should be able to determine exactly how much petrol you used for the number of kilometres that you drove. To get the mileage number, divide the total distance driven by the amount of fuel that you used. This will tell you how far you can drive on one litre of petrol. You can then combine this number with the average distance that you travel to determine what your mileage cost is. If crunching numbers isn’t your strong point, there are mileage calculators available that will do the math for you. Keep in mind that the actual amount will fluctuate as petrol prices change, so track it for at least six months to a year to get a good average.

Maintenance and Insurance

Besides petrol, another major expense associated with running your car is the on-going costs associated with maintenance and car insurance. While you can’t really cut down on insurance, experts recommend that you regularly get a new car insurance quote. Prices can change dramatically and you should not pay more than is necessary for this required service. Some of the best prices are found through online car insurance quotes, so check these options at least once a year. As with petrol costs, you should track insurance and maintenance expenses for at least six months. This will give you a good picture of what your average expenses are for these categories. If you want to get detailed, you can also take the overall expense of these items and determine how much cost they add per mile or kilometre that you drive.

Depreciation Takes Its Cut

For big-ticket purchases, nothing beats a vehicle for fast depreciation. What your car was worth new is not its current value. Unlike items like petrol expenses and wear and tear, time is the only factor needed for depreciation. The depreciation expense is a fairly simple equation. To determine how much your vehicle depreciates every year, take your purchasing cost and subtract your car’s current value from that number. Divide this number by how many years you have owned the car for the annual amount of depreciation.