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Your Car: How to Drive for Less

Figuring where the money's going makes it easier to drive for less.

Beyond knowing that it's pretty expensive, few of us can put an accurate dollar figure on just how costly it is to own a car. But knowing how much money goes where can make it easier to spend less. And we have some ideas about how you can save.

The Internal Revenue Service figures it costs an average of 34.5 cents per mile to operate a car. Of course, it's possible to spend a lot more. It's also possible to spend considerably less.

Drive for less

Purchase — Runzheimer International, a cost analysis firm, has calculated the price of car ownership based on a 36-month retention cycle. It says that depreciation and interest account for about half the expense of driving. Because cars depreciate most drastically when they're newest, buying a used car can eliminate the worst depreciation. It also can lower vehicle taxes and may reduce insurance premiums. Typically, a car becomes cheaper to run as it ages—until it starts falling apart, when the expense curve begins to swing upward.

That driving an economy car is cheaper than driving a luxury model isn't a news flash, but the size of the difference may give pause. For example, Runzheimer says that driving a Saturn costs less than a third of what it costs to drive a Mercedes. It puts the price of owning a Saturn SL2 for three years at $7,591 and of owning a Mercedes S500 for three years at $25,402.

If possible, pay cash.

Gasoline — Use whatever name-brand gas is least expensive; pump your own. Consult the owner's manual to determine what octane rating to buy. Octane is not a measure of quality but of resistance to knocking. Most cars are designed to use regular gasoline and will run no better on premium.

Maintenance and repair — Maintenance tends to be cheaper than repair. Find a good repair facility and build a long-term relationship with the people there.

Insurance — Increasing deductibles may lower premiums. When a car has depreciated to the point at which its loss could be covered by the owner, some people drop collision coverage. Cars that are more attractive to thieves, more expensive to repair, or statistically more likely to be in a crash tend to be more expensive to insure than cars that represent less risk. Before you buy, consult your insurance agent.

Your personal driving cost

 Note what you spend in these areas:

Gas — Record all purchases. If you pay by credit card, you may have a year's worth of purchases recorded already.

Maintenance and repair — List every penny spent on upkeep. Again, thanks to progress toward a cashless society, you may already have a year's records.

Insurance — Include the premiums of all coverages you carry.

Registration and tax

Depreciation — If the car's new, include in its price the sales tax and all fees. If not, determine its value by consulting local ads for prices of similar vehicles, or see the Kelley Blue Book at the library or at At year's end, research the car's current value the same way. The difference between the car's worth when you began and its worth at year's end is depreciation. Again, there's no need to wait—just consult the current Kelley Blue Book and one from a year ago.

Finance charges — If you have a car loan, include a year's worth of interest.

Adding these figures gives you a good idea of the annual cost of operation for your car. Notice that most of what you pay goes to factors relatively little affected by mileage: Depreciation will erode value and you'll be paying for registration, tax, insurance, and financing even if the vehicle rolls out of the garage only on state occasions.

Intangibles — While following these suggestions may help you end up with a more cost-effective car, you may want to assign your own value estimate to factors the coolly calculating Runzheimer people, let alone those at the IRS, didn't consider. For many, driving fun, panache, ego boost, and the statement, real or imagined, that your car makes about you are worth considering. Once you know how much you spend for inescapable costs, you can more easily see the price of such intangible benefits.

This article was first published in September 2001. Some facts may have aged gracelessly. Please call ahead to verify information.