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Concept
Car costs
Summary
A car's internal costs are all the costs consumers pay to own and operate a car. Normally these expenditures are divided into fixed or standing costs and variable or running costs. 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, like insurance or road taxes. Variable or running costs are those that depend on the use of the car, like fuel or tolls.
Compared to other popular modes of passenger transportation, especially buses or trains, the car has a relatively high cost per passenger-distance traveled. Motorists in the United Kingdom spend, on average, roughly 1/3 of their average net income to operate a car, while motorists in Portugal spend approximately 1/2 of their net income. For the average car owner, depreciation constitutes about half the cost of running a car. The typical motorist underestimates this fixed cost by a significant margin.
The IRS considers that the average US automobile has a total cost of US8,700 per year, or US$720 per month, to own and operate their vehicle.
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.
Car finance comprises 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 the interests paid 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.
The yearly depreciation of a car is the amount its value decreases every year.
Official source
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