May 5, 2015

I've Paid About 48¢ Per Mile to Drive My Car


I've owned my car now for over 8 years.    In that time I've just now hit 70,000 miles total.   I paid a little over $14,000 for it in 2007 and its worth around $4000 today.

I'm estimating my expenses but I'm probably pretty close in my estimates.    I figure this is likely correct within 10%.    I just don't have detailed accurate records of everything I've spent for 8 years, so I'll have to estimate.

The depreciation I figured using the current private party sales estimate value from Edmunds versus what I paid originally 8 years ago.

I figured gasoline costs based on using historical numbers for our city off of Gasbuddy.com     Those numbers are going to be a bit inflated since they're using the city average value and I pay below average prices for my gas.    For example right now the city average is about $2.90 and the station I go to has gas for $2.71.   

The costs for insurance, oil changes, tires, repairs & maintenance and taxes are all estimates based on my memory and there is more margin for error in these categories.  

Lastly I added a figure for the opportunity cost which is based on figuring 4% interest on the original ~$14,000 purchase price over 8 years.  I'm pretty sure I could have made 4% with that money.

Here's the summary of costs over the years and the totals :

depreciation  $     10,000
insurance  $       5,600
gas   $     10,182
oil changes  $          560
tires  $          500
repairs/maint  $       1,500
tax  $          400
opportunity cost  $       4,544
TOTAL $33,286
per mile $0.476


So the total cost there is $0.476 per mile or roughly 48¢.

Thats more than I'd have guessed.      

If I'd done a very quick almost off the top of my head calculation I think I'd have come up with about 30¢ per mile cost.   That would have been based on the $10,000 in depreciation, figuring "a couple thousand more for other stuff" and then guessing a price of $2.70 for gasoline.      I would have underestimated the cost of insurance and the opportunity cost.   And I apparently remembered the price of gas wrong over the past eight years, most likely because my memory is biased towards what I paid last week for gas more than 7 years ago.

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5 comments:

  1. I kept exact records of the cost of owning my 97 Camry from when I bought it in October 2009 to when I traded it in in May 2012 and the total cost came to 16.8 cents per mile. I didn't include opportunity cost but I did include all the other costs you counted plus car washes and parking. My lower cost per mile was mainly due to a lower purchase price and lots of miles driven each year.

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  2. Andy,

    16.8 cents is very good.

    Driving more certainly helps keep the average cost/mile down. I don't drive too much really. If I drove twice as much I figure my average would be at about 34 cents.

    Jim

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  3. Am debating a new (used) car and enjoyed your posts. I'm a retired accountant and have kept a meticulous log on my 12 year Camry. Only have driven 16.8 miles per day over last 10 years, but recorded gas, maint, registration, ins to the penny. You're probably optimistic on private sale value (use used car $), and couldn't exactly replicate your "opportunity cost" which I'd argue with anyway. You can get a 4 % return on 14K? Go to Wall Street. Also you'd need to subtract replacement transportation costs (bus, train, etc). Could also calculate a "vanity" cost as in buy a used 2012 Lexus or a used 2014 Camry.

    Amusingly, I painstakingly calculate my per mile cost today at $.492 vs your $.476. Or we could skip it all and simply Google the IRS rate. They allow $.540!

    Final comment. A salesrep suggested I lease a new Toyota. A mere $260 a month for a "new" car every 3 years. That's about $.58 PER MILE and BEFORE gas, ins, maint, etc. Good to know numbers.

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  4. MrAg,

    Thats very interesting to see your costs came out so close to mine.

    This post is about 2 years old now and I don't recall the rational or math behind my opportunity cost. I do have rental investment mortgages at 4 and 5% so I may have used that as basis for my opportunity cost. Instead of having put $14k into my car I could have instead paid down a mortgage and saved that 4-5% the entire time, risk free.

    -Jim

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  5. For rough cut numbers, it would seem a plain old $.50 a mile cost is great. And that is for a USED, low maintenance car (Camry) held for a few years and driven maybe 5-15,000 miles/year.

    Mortgage investment or not, you'll need some form of transportation which will have a opportunity cost (even if a bike) ;-)

    I previously had a used Lexus (great car BTW) bought in a great deal that I later destroyed in an accident. The ins co gave me REPLACEMENT (dealer) value that made my "depreciation" a NEGATIVE $.053 per mile. My ops cost there over 4.5 years was still $.29 per mile.

    IMHO, details on anyone paying less than say $.40 per mile on a car are needed. Cars are an expensive expense. Maybe time for a new post on 'cheapest' used car to buy (something 7 years old, use for 8 years)?

    Please keep up the good work, Al

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