how much does your car cost per day to run?.... find out...
01 March 2007, 09:36 AM
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01 March 2007, 10:14 AM
#9
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That calculator is crap. It makes a fundamental mistake in adding up the costs. Total Finance costs should not be added to you monthly bill, only the interest costs should be added.
Taking my Fabia for example Purchase price was £11k, I'd expect £5.5k back after 3 years, so £5.5k over 3yrs is the depreciation, add on the fuel, tax servicing and insurance and you get the true cost of the car.
What the calculator does is add the full monthly payment and not just the cost of the interest, this is a mistake. It should only add the interest cost and not the full repayment, as it has already factored in depreciation in your monthly costs. I may have borrowed £11k to buy the car, but I'll get £5.5k back when I sell the car, the equity of the car, so by adding the full monthly repayment to the calculation its adding in depreciation costs twice.
Taking my Fabia for example Purchase price was £11k, I'd expect £5.5k back after 3 years, so £5.5k over 3yrs is the depreciation, add on the fuel, tax servicing and insurance and you get the true cost of the car.
What the calculator does is add the full monthly payment and not just the cost of the interest, this is a mistake. It should only add the interest cost and not the full repayment, as it has already factored in depreciation in your monthly costs. I may have borrowed £11k to buy the car, but I'll get £5.5k back when I sell the car, the equity of the car, so by adding the full monthly repayment to the calculation its adding in depreciation costs twice.
01 March 2007, 10:54 AM
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Here's the text of my letter to the editor of the website about his calculator. I'm certain I'm correct in my calculations but would welcome your comments to...
Hello,
I used your car cost calculator this morning and have discovered it is completely incorrect.
In a nutshell it adds up the costs incorrectly if you have taken a loan out to buy the car. By asking for purchase price and expected resale price at the beginning of the calculation it is quite rightly factoring the so called hidden cost of depreciation. Then you fill in the all the other details of mileage, tax servicing etc etc.
The mistake the calculator makes is to then add the full monthly repayment costs of any loan taken out to buy the car, it should only factor in the interest costs of the loan to generate the correct cost.
Using my car as an example
Purchase price = £11000
Sale Price after 3 yrs = £5500
Depreciation = £5500/3 =£1834 per year
Running costs using your calculator (14k miles at 45mpg, fuel = 94ppl, tax £110, servicing £200, insurance £410) = £2050 per year
Therefore the total cost = £3884 per year, or £324pm roughly. This is the true cost and is correct.
Your calculator then asks about finance repayments and this is were the mistake is made. By adding the total repayment amount to the above costs, it is doubling the cost of the depreciation. If I take loan of £11k to buy the car at the start, and repay that over the 3 years I own the car, I will have £5500 equity in the car when I sell it, having repaid all the initial £11k plus interest. By adding the total repayments to you have ignored the equity/value of the car. To gain the 'True' cost the calculator should only add the interest costs of the loan, and not the total repayment.
£11000 borrowed at 7.9% APR repaid over 3 years = £344pm approx. Your calculator adds this total repayment cost to the calculation.
What it should add however is:-
Interest on £11000 borrowed at 7.9%APR repaid over 3 year = £1384 approx, or £38pm.
Therefore the 'True' cost is £362pm, for the above example, not the £668pm your calculator quotes.
Please can you change your calculator, as at the moment it is very misleading. I welcome your comments.
Hello,
I used your car cost calculator this morning and have discovered it is completely incorrect.
In a nutshell it adds up the costs incorrectly if you have taken a loan out to buy the car. By asking for purchase price and expected resale price at the beginning of the calculation it is quite rightly factoring the so called hidden cost of depreciation. Then you fill in the all the other details of mileage, tax servicing etc etc.
The mistake the calculator makes is to then add the full monthly repayment costs of any loan taken out to buy the car, it should only factor in the interest costs of the loan to generate the correct cost.
Using my car as an example
Purchase price = £11000
Sale Price after 3 yrs = £5500
Depreciation = £5500/3 =£1834 per year
Running costs using your calculator (14k miles at 45mpg, fuel = 94ppl, tax £110, servicing £200, insurance £410) = £2050 per year
Therefore the total cost = £3884 per year, or £324pm roughly. This is the true cost and is correct.
Your calculator then asks about finance repayments and this is were the mistake is made. By adding the total repayment amount to the above costs, it is doubling the cost of the depreciation. If I take loan of £11k to buy the car at the start, and repay that over the 3 years I own the car, I will have £5500 equity in the car when I sell it, having repaid all the initial £11k plus interest. By adding the total repayments to you have ignored the equity/value of the car. To gain the 'True' cost the calculator should only add the interest costs of the loan, and not the total repayment.
£11000 borrowed at 7.9% APR repaid over 3 years = £344pm approx. Your calculator adds this total repayment cost to the calculation.
What it should add however is:-
Interest on £11000 borrowed at 7.9%APR repaid over 3 year = £1384 approx, or £38pm.
Therefore the 'True' cost is £362pm, for the above example, not the £668pm your calculator quotes.
Please can you change your calculator, as at the moment it is very misleading. I welcome your comments.
01 March 2007, 11:32 AM
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You're most probably right Reffro. Its just a marketing tool used to try and sell "cheap" finance, so I am not suprised the calcs are a bit flimsy...
01 March 2007, 12:23 PM
#15
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21p a mile or £14.08 a day 
Skoda Fabia vRS
Bought £9.5k, sell in 3yrs for £7k (maybe
)
25k/yr @ 52mpg @ 89.9p/litre (diesel)
£100 tax, £100 servicing, £400 insurance
Loan £144pcm @ 5.8% over 60 months.
It's also my teaching car so offset that with £100+ a day income
Skoda Fabia vRS
Bought £9.5k, sell in 3yrs for £7k (maybe
)25k/yr @ 52mpg @ 89.9p/litre (diesel)
£100 tax, £100 servicing, £400 insurance
Loan £144pcm @ 5.8% over 60 months.
It's also my teaching car so offset that with £100+ a day income
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