Car costs
Acar's internal costsare all the costs consumers pay to own and operate acar.[3][4][5]Normally these expenditures are divided into fixed or standing costs and variable or running costs.[6]Fixed costs are those which do not depend on the distance traveled by the vehicle and which the owner must pay to keep the vehicle ready for use on the road, likeinsuranceorroad taxes.Variable or running costs are those that depend on the use of the car, likefuelortolls.[7]
Compared to other popular modes of passenger transportation, especially buses or trains, thecarhas a relatively high cost per passenger-distance traveled.[8]Motorists in theUnited Kingdomspend, on average, roughly 1/3 of their averagenet incometo operate a car,[9]while motorists inPortugalspend approximately 1/2 of their net income. For the average car owner,depreciationconstitutes about half the cost of running a car.[9]The typical motorist underestimates thisfixed costby a significant margin.[10]
TheIRSconsiders that the average US automobile has a total cost of US$0.58/mile, around €0.32/km.[11]According to theAmerican Automobile Association,the average driver of the averagesedanspends totally approximately US$8,700 per year, or US$720 per month, to own and operate their vehicle.[2]
Fixed costs
[edit]Car acquisition
[edit]The car itself has a cost. The cost can be reduced by buying a reused car. But the reused car may have hidden defects, hidden problems, or be about to be out of norms. It is the most shallow and most immediate cost. But it can be delayed under a loan scheme.
Loan costs
[edit]Car financecomprises the different financial products which allows someone to acquire a car with any arrangement other than a single lump payment. When used, and for the purpose of assessing the private financial costs, one must consider only theinterestspaid by the car owner, as some part of the amount the owner pays each month for the finance is already embedded in the depreciations costs.
Depreciation
[edit]
The yearlydepreciationof a car is the amount its value decreases every year. Normally a car's value is correlated with the price it has on the market, but on average a car has a depreciation around 15–20% per year.[12][13]Depending on market conditions, cars may depreciate 10–30% the first year.[14]Since 2021, however, cars have appreciated significantly the first year due to shortages of cars and up to five-year wait times for new cars.[citation needed]
Car taxes
[edit]Car taxes,road taxes,vehicle taxes orVehicle Excise Dutyare the amount of money car owners pay the government to allow the car to operate within that region or state. These taxes serve to maintain the road infrastructure or to compensate thenegative externalitiescaused by themotor vehicles.These taxes may depend onengine displacement,vehicle weight, miles traveled,CO2emissions,or the car value.
Insurance
[edit]Insuranceserves to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there-from.
Inspection
[edit]Vehicle inspectionis a procedure mandated by law in which a vehicle is inspected to ensure that it conforms to regulations governing safety, emissions, or both.
Driving license
[edit]A driving license is often required to drive a car.
Cost of capital
[edit]Thecost of capital,applied to a purchase of a car, is the amount of money the car owner could have obtained, if they, instead of buying the car, applied that amount of money to other worthy investment. The cost of capital is the rate of return that capital could be expected to earn in an alternative investment of equivalent risk. Considering by default the car has depreciation, and that such depreciation is already considered at a certain cost item, the cost of capital of owning a car, is then the income that the car owner could have obtained with the money spent on such car. One example could be a common standard interest rate in a deposit account.[15]
Running costs
[edit]Fuel
[edit]The fuel costs depend basically on four factors, namely the distance travelled by the car, theprice paid for the fuel,theenergy efficiency of the carand thetype of driving.In Western countries, this cost normally is the second highest after depreciation.
Maintenance
[edit]The maintenance of a car can have the purpose to be a long term or a short term maintenance. This cost might be very irregular and somewhat unpredictable but tends to increase with the age of the car. On this item are includedcar partsthat need to be replaced after a certain period of time (for example every two years) or with a specific number of travelled kilometres or miles, liketiresor filters.
Repairs and improvements
[edit]Repairs costs are completely unpredictable because they depend on the number and severity of car collisions, like dents repairing for example.[citation needed]These costs also refer tospare partssubstitution due to malfunctioning. On this cost item it might be included also the parts bought to improve the performance or the aesthetic of the vehicle.[citation needed]
Parking
[edit]The costs ofparkinginclude all the money the user needs to pay to park their car. This applies normally to car parking lots, like in offices, public buildings, shopping centres or in the downtown; but also on the public space (normally in the inner part of some city) usingparking meters.This cost might be relatively predictable, if the user for example has a monthly contract with some parking lot company, or if he rents a private parking space.
Tolls
[edit]Atoll road,also known as a turnpike or tollway, is a public or private roadway for which a fee (or toll) is assessed for passage. Normally this applies tomotorways,bridgesandtunnelsbut it might also apply, like in some cities such asLondonorStockholm,to gain access to the city-centre. This cost might be predictable if the user passes the tolled roadway, a defined number of times per month.
Fines
[edit]A traffic fine ortraffic ticketis a notice issued by a law enforcement official to amotoristaccusing violation oftraffic laws.Traffic tickets generally come in two forms, citing amoving violation,such as exceeding thespeed limit,or a non-moving violation, such as aparking violation.These tickets almost always imply the payment of a certain quantity of money.
Car washes
[edit]The cost ofcar washvaries according to the frequency users clean their car, and with the price of each cleaning.
See also
[edit]References
[edit]- ^"Automobile costs for United States; Average monthly cost per type".Automobile Costs Calculator.autocosts.info. April 2016.
- ^abStepp, Erin (April 28, 2015)."Annual Cost to Own and Operate a Vehicle Falls to $8,698, Finds AAA".NewsRoom.American Automobile Association.RetrievedApril 4,2016.
- ^The Automobile Association (2014)."Motoring Costs".theaa.
- ^Gössling, Stefan; Kees, Jessica; Litman, Todd (1 April 2022)."The lifetime cost of driving a car".Ecological Economics.194:107335.doi:10.1016/j.ecolecon.2021.107335.
- ^Andor, Mark A.; Gerster, Andreas; Gillingham, Kenneth T.; Horvath, Marco (April 2020). "Running a car costs much more than people think — stalling the uptake of green travel".Nature.580(7804): 453–455.doi:10.1038/d41586-020-01118-w.
- ^The Automobile Association (2014)."Motoring Costs 2014"(PDF).theaa(PDF file).
- ^The Automobile Association."Car running costs 2013/14".theaa.
- ^ Diesendorf, Mark,"The Effect of Land Costs on the Economics of Urban Transportation Systems"(PDF),Proceedings of Third International Conference on Traffic and Transportation Studies (ICTTS2002),pp. 1422–1429,ISBN978-0-7844-0630-4,archived fromthe original(PDF)on 2008-07-19,retrieved2008-04-15
- ^ab Osborne, Hilary (2006-10-20)."Cost of running a car 'exceeds £5,000'".The Guardian.London.
- ^ Meek, James (2004-12-20)."The slow and the furious".The Guardian.London.
- ^IRS (December 14, 2018)."IRS issues standard mileage rates for 2019".
- ^Simon Donohue, Business reporter (BBC) (27 August 2013)."How to beat price depreciation when choosing a new car".BBC News.
{{cite news}}:|author=has generic name (help) - ^John Fuller (24 August 2009)."What is car depreciation?".
- ^Lee, Thomas (4 October 2016)."Buy These 12 Cars Used, Not New Based on Study of 14 Million Cars".Retrieved2 November2016.
- ^"Car running costs,Your guide to how we calculate car running costs".The Automobile Association. 7 July 2014.
External links
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