Saturday, July 7, 2007

Best Measure for Cost of Car Ownership

What is the BEST measure for Cost of Car Ownership? Most buyers consider the selling price in their purchase while others may include the loan interest. These days, buying a car gets even more complex as dealers bundle insurance, loan with interest rebate and different COE bidding scheme such as non-guaranteed and guaranteed bids. You may be able to have an estimate of how much you are going to pay for your purchase but the total cost of ownership for a vehicle is really impossible to determine until you actually sell it.

After you have sold the vehicle, you would then have all the financial information such as the selling price to the used car dealer or scrap price and the balance of loan payment minus the Rule of 78 rebate and prepayment penalty. You can then compute the total incurred cost over the total number of months used to find the average monthly cost.

You can get an estimate of the monthly depreciation in my post on Cost of Ownership. Thereafter, you can compare the average monthly cost of each vehicle that you have owned and hopefully, the number is coming down as you gets wiser. However, if you have been upgrading, the number is bound to go up.

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