Depreciation - save now, pay later - Three-Year Cost

Article 4 of 5 See all
  •  Buying a cheaper car could cost you
  •  Depreciation costs exposed
  •  Are you a winner or loser?

Working out the total ownership cost of individual cars requires lots of calculations, but the good news is that you don’t have to do them. The What Car? Three-Year Cost tallies up all the costs associated with car ownership, to give you one neat figure. The Three-Year Cost for every new car can be found in the buyer’s guide at the back of this magazine.

Bear in mind that the figure is worked out on the assumption that you’ll sell after three years, so if you plan to keep your car significantly longer than this, you will need to whip out the calculator and estimate your own total ownership cost. The same applies if your annual mileage varies much from the average of 12,000 miles.

If you’re borrowing money to finance your new motor, you’ll need to consider interest charges. Right now, the best loan rates are 7.6% APR, which works out to roughly £40 every year in interest per £1000 borrowed. So, the extra £2600 it would cost you to buy the Audi A3 in our example – over the Peugeot 308 – would end up with you paying an extra £305 in interest over three years. Even if you factor this into the equation, the Audi would work out more than £1000 cheaper than the Peugeot over the three-year ownership period.

Let’s face it, you’ll also be driving around in the better and more desirable car, too.

What Car? says…
A cheaper car might save you cash at the point of sale, but it’s vital to check the What Car? Three-Year Cost of any new car before buying, because it could cost you more in the long-run. Play the long game well, and you could end up driving away in a posher car, saving yourself some cash, too.

See next page for Three-Year Cost examples.

Depreciation - save now, pay later - Three-Year Costs compared

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