By LESLEY GREGORY
Are you a two-car household? We are, and I frequently question why we don’t ditch the second car — usually when I’m trying to find an on-street parking spot at the end of the day.
It’s not just about fighting for a car park but also about the impact on the environment, when cutting back to one car would encourage us to use public transport more.
And it’s about the money. The convenience of two cars in a (now) four-adult family is great, right up to the point the vehicle registration bill arrives, followed soon after by the insurance premium request for the “spare”. There’s a twinge, too, when I fill the car with petrol — especially if I’ve chosen the most expensive day of the week to notice the tank is running on empty.
So what does our second, eight-year-old car really cost us, and what are our alternatives?
You can go through your own bills to work out the actual figure for your car. Check your credit card statements or banking records to find the annual or monthly costs of:
- Vehicle insurance
- Vehicle registration and road tax
- Servicing and repairs
Completing this exercise, I found that last year we spent £2330 on our Mazda, about a third of that on insurance alone.
If you want to get to the true cost of owning a car, though, you should also work out depreciation – the value you’re losing every year the vehicle ages. One very rough rule of thumb is that a car loses 15% of its value annually.
For a very simple calculation, I checked the current value of our second car (which started out as our only car, before we bought another but kept this one for mum-and-dad driver instruction).
I then assigned 15% of the current value as the amount I’d lose next year. For our eight-year-old car, depreciation came to £470 for the year. You can also try depreciation calculators like this one.
With running costs and depreciation together, our second car is actually costing us £2800 a year, or about £235 a month — more than I had imagined. (Conversely, if we sold it we could bank something over £2000 — less than I imagined.)
What’s the alternative?
There’s no question that bus or train travel would win hands down in any transport costs duel. But with four adults in the household sometimes we really do need a second car — not everywhere is serviced by public transport, and our needs include carrying a very large dog and musical equipment (preferably not at the same time).
That means we’re investigating a car sharing service we can see has a number of vehicles on standby in our suburb. The service has a range of subscriptions, but the mid-level, £6 a month package would allow two of us to drive. We’d then pay weekend rates of £7.50 to £14 an hour, depending on the type of vehicle. Importantly, the price includes insurance and petrol.
We estimate we’d need a second, small car maybe once a weekend for, say, three hours. That comes to a monthly cost below £100 – not even half the price of owning our second car.
The maths says it all.
LESLEY GREGORY is an experienced personal finance and consumer journalist. If you’re interested in more of her personal finance tips, here are some more of her most recent articles: