Do You Know True Cost Of Car Ownership?

Friday, 5. September 2008

Much has been written recently about ‘wholelife costs’ when comparing purchase methods to leasing of cars because the one most important element of the equation is the value of the car in 2 or 3 years time. The problem is that most people are far too optimistic and this throws the whole calculation out of kilter. Take for example a Renault Scenic 1.6 Dynamique S costing £18,000 including metallic paint. In a straw poll I asked several people what they thought the car would be worth in 3 years time on average mileage. Their estimates ranged from £7,000 to £11,000 but the estimate according to What Car is 25% of the purchase price which would be a dismal £4,500 and a trader who regularly goes to auctions suggested that the car would probably return around £4,000. So even though What Car suggested that a keen buyer should be able to buy the new car for £15,500 the depreciation alone would work out to be £11,000 to which you must add the interest charges and Road Fund Licence amounting to a further £2,500. But few customers make an accurate comparison because they only find out how much more they have paid when they get to the end of the 3 years and find out what the car is really worth. By then of course most of the figures have been forgotten. If you are looking to reduce your monthly costs you really should consider leasing but when doing the comparisons make sure that you are making a realistic comparison. By Graham Hill