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What is the average cost per mile to operate a car including depreciation maintenance gasoline and insurance?

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2010-04-16 16:12:18

"From_the_AAA" id="From_the_AAA">From the AAA

In the US, according to the AAA, the cost of operation is an

average of 56 cents per mile. AAA includes the cost of depreciation

of a new car, more than $3,500 per year. The actual cost can be

much higher or lower depending on type of car, new or used, and

miles driven. The more miles you drive, the lower the cost per

mile.

AAA estimates by car size (gasoline $2.30 per gallon, 60% city

driving)

Small car : 50.5 cents (10,000 miles) to 35.4 cents (20,000

miles)

Medium car : 70.2 cents (10,000 miles) to 45.5 cents (20,000

miles)

Large car : 86.8 cents (10,000 miles) to 54.9 cents (20,000

miles)

*The IRS in 2010 allows 50 cents per mile in computing expense

deductions.

"Cost_Per_Mile_vs._Service_Costs" id=

"Cost_Per_Mile_vs._Service_Costs">Cost Per Mile vs. Service

Costs

*There is a long explanation that a WikiAnswers contributor had

published in Mortgage magazine in March of 2005 under their

copyright. Keep in mind insurance, gasoline and depreciation are

relative to the vehicle.

Here are excerpts:

As a service writer, I am continually asked, "When should I get

rid of my car?" Or I am faced with a distressed customer who has

spent $600.00 on a car that they think they could buy for $500.00,

clamoring that "It's time to get rid of this thing and buy a new

one." There were times of internal stress that was felt because our

customer was possibly putting money into a vehicle that they

thought they shouldn't be, giving the illusion of "ripping off the

customer". While we never have a crystal ball to know what will

happen in the future, giving the best advice possible is

paramount.

We had a customer named Neil who had an old Pontiac 6000 that

looked like it was on its last legs: visually as well as

mechanically. I told him to lose the car before it nickel-and-dimed

him to death any worse. Even though it was cutting my own throat, I

owe him my honest opinion. We talked about other options that were

out there and he looked around but couldn't quite find what he

wanted; besides he liked his old jalopy. It served his needs and

was paid for. Faithfully, I would see him every couple months for a

few hundred-dollar repair bill. This went on for 5 years. He

eventually moved to New England, driving the old rickety but

dependable Pontiac wagon. It made me analyze my recommendations a

little closer and re-think about when is the time to replace.

Meanwhile, I had watched technicians over the years driving some

real rust buckets or buying them from a customer because the owner

didn't want to spend $500.00 to repair a car, because the car was

only "worth" $1000.00. The technician looked at it differently:

setting aside the repairs for him would be much less expensive. The

shop owner I work for had always presented the answer to the

question: "Is it worth fixing?" into a logical light. He would

reply to the owner, "Do you like the car?" and then follow up with,

"Can you buy a car that you know is the exact same condition as

your present car for the same cost as what your repair bill will

be?" Many times customers repaired their car with this logic. But

living in this disposable society, I still had trouble quoting a

repair that rivaled the expected market value of the car

itself.

For years I fought with doing the right thing for my customer as

well as the right thing for my employer. There had to be a better

way of answering these questions based on more than what I would do

if it was mine or what I felt was right for them. After all, what

is their financial obligation compared to mine? That is part of the

equation for whoever's car it is. What I needed to know was how it

could be answered with a common denominator. We had a customer that

came in and needed $600.00 worth of work on their 1994 Hyundai.

They were customers that kept up on the maintenance we recommended

and did repairs as required. Being a loyal customer, it seemed

reasonable that they would be a good customer to use for number

crunching. I added all of their invoices from 36,000 miles to the

present mileage. I used these numbers because this is the mileage

that the majority of the manufacturers' warranties expire. The

current mileage is subtracted from the 36,000-mile warranty

expiration point. I then divided the dollars spent by this to get a

dollars-per-mile figure. It came out to about $.08/mile. This

didn't mean much at this point. So to get a better comparison to

what new car is going to be costing the customer; the purchase

price is divided by the first 36,000 miles that it is under

warranty. Since a new car owner is getting "problem free driving"

for 36,000 miles, the purchase price should not be extended beyond

this. Using a purchase price of $15,500 plus the sales tax, tags,

title brings it to about $17,000 yielding about $.47/mile. This

figure does not include oil changes, tire rotation, interest on a

loan or an insurance premium increase. Now that means something! I

went back to other loyal customers in our database and found they

generally pay $.07 to $.13 per mile to run their vehicles. So they

save a minimum of $5,100.00 more annually if they drive 15,000

miles.


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