Operating Costs – Real Costs

Operating costs can kill a good deal on a car. The depreciation of a car is the main financial loss expected in the first five years of ownership. That is the fixed asset loss of the vehicle. The car pretty much only depreciates only once.

The next big continuing loss year after year is the cost of fuel. This is why the MPG or MPGe is so important. The factors are the cost of the fuel, how much fuel you need, and the efficiency of turning the fuel into energy.

The cost of fuel is not within your control as much as the other factors. Still there are tools out there to help you. A web site called GasBuddy.com uses the general public to report on where the cheapest prices of gas is in relative real time.

How much fuel you need is determined by how far you are from work, grocery store, etc. This is a little more within your control. The choice is yours how far or how close you are to the places you need to go.

Efficiency is determined by which kind of car you drive and how you drive it. One resource is the fueleconomy.gov web site. Compare MPG with trip length HERE to find out the difference between two different cars. How you drive is important too. According to the US Dept. of Energy; observing the speed limit is worth 7-14% better gas mileage, removing excess weight can be 1-2% better gas mileage, and having tires with lower rolling resistance that are properly inflated can have a factor of 15-27%  (The report) .

Collectively the three factors above can be 23-43% of your gas mileage.

The cost of repairs and maintenance is the next biggest factor for operating costs of a car. This can have a decreased expenditure out of pocket by buying a more reliable car. This can be checked at Consumer Reports (subscription needed for all article access)

Old Faithfull-pdPhoto.jpg
Old Faithful Geyser – Reliability at it’s Best 

The bottom line is although car depreciation is about 50% loss of the value in the first 5 years the holding costs can be like a leaky faucet for your finances. The only difference is the holding costs are continuous.

 

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