The car internal costs are all the costs consumers pay to own and operate a

car A car or automobile is a motor vehicle with wheels. Most definitions of ''cars'' say that they run primarily on roads, seat one to eight people, have four wheels, and mainly transport people instead of goods. The year 1886 is regarded as ...

. Normally these expenditures are divided by fixed or standing costs and variable or running costs. Fixed costs are those ones which do not depend on the distance traveled by the vehicle and which the owner must pay to keep the vehicle ready for use on the road, like

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

road tax Road tax, known by various names around the world, is a tax which has to be paid on, or included with, a motorised vehicle to use it on a public road. National implementations Australia All states and territories require an annual vehicle registra ...

es. Variable or running costs are those that depend on the use of the car, like

fuel A fuel is any material that can be made to react with other substances so that it releases energy as thermal energy or to be used for work. The concept was originally applied solely to those materials capable of releasing chemical energy but ...

or tolls. Compared to other popular modes of passenger transportation, especially buses or trains, the

has a relatively high cost per passenger-distance traveled. Motorists in the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...

spend, on average, roughly 1/3 of their average

net income In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, a ...

to operate a car, while motorists in

Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of ...

spend approximately 1/2 of their net income. For the average car owner,

depreciation In accountancy, depreciation is a term that refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the a ...

constitutes about half the cost of running a car. The typical motorist underestimates this

fixed cost In accounting and economics, 'fixed costs', also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be recurring, such as interest or r ...

by a significant margin. The

IRS The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax ...

considers that the average US automobile has a total cost of 0.58 USD/mile, around 0.32 EUR/km. According to the

American Automobile Association American Automobile Association (AAA – commonly pronounced as "Triple A") is a federation of motor clubs throughout North America. AAA is a privately held not-for-profit national member association and service organization with over 60 m ...

the average driver of the average sedan, spends totally approximately 8700 USD per year, or 720 USD per month, to own and operate their vehicle.

Fixed costs

Car acquisition

The car itself as a cost. The cost can be reduced by buying a reused car. But the reused car may have hidden defects, hidden problems, or be about to be out of norms. It is the most shallow and most immediate cost. But it can be delayed under a loan scheme.

Loan costs

Car finance Car finance refers to the various financial products which allow someone to acquire a car, including car loans and leases. Car purchases The most common method of buying a car in the United States is borrowing the money and then paying it off ...

comprises the different financial products which allows someone to acquire a car with any arrangement other than a single lump payment. When used, and for the purpose of assessing the private financial costs, one must consider only the

interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...

s paid by the car owner, as some part of the amount the owner pays each month for the finance is already embedded in the depreciations costs.

Depreciation

The yearly

of a car is the amount its value decreases every year. Normally a car's value is correlated with the price it has on the market, but on average a car has a depreciation around 15% to 20% per year. Depending on market conditions, cars may depreciate between 10-30% the first year.

Car taxes

Car taxes,

es, vehicle taxes or

Vehicle Excise Duty Vehicle Excise Duty (VED; also known as "vehicle tax", "car tax", and more controversially as "road tax", and formerly as a "tax disc") is an annual tax that is levied as an excise duty and which must be paid for most types of powered vehicles which ...

are the amount of money car owners pay the government to allow the car to operate within that region or state. These taxes serve to maintain the road infrastructure or to compensate the

negative externalities In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...

caused by the

motor vehicle A motor vehicle, also known as motorized vehicle or automotive vehicle, is a self-propelled land vehicle, commonly wheeled, that does not operate on Track (rail transport), rails (such as trains or trams) and is used for the transportation of pe ...

s. These taxes may depend on

engine displacement Engine displacement is the measure of the cylinder volume swept by all of the pistons of a piston engine, excluding the combustion chambers. It is commonly used as an expression of an engine's size, and by extension as a loose indicator of the ...

, vehicle weight, miles traveled, CO₂ emissions, or the car value.

Insurance

Insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

serves to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there-from.

Inspection

Vehicle inspection Vehicle inspection is a procedure mandated by national or subnational governments in many countries, in which a vehicle is inspected to ensure that it conforms to regulations governing Car safety, safety, Automobile emissions control#Emission Tes ...

is a procedure mandated by law in which a vehicle is inspected to ensure that it conforms to regulations governing safety, emissions, or both.

Driving license

A driving license is often required to drive a car.

Cost of capital

The

cost of capital In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or from an investor's point of view is "the required rate of return on a portfolio company's existing securities". It is used to evaluate new ...

, applied to a purchase of a car, is the amount of money the car owner could have obtained, if they, instead of buying the car, applied that amount of money to other worthy investment. The cost of capital is the rate of return that capital could be expected to earn in an alternative investment of equivalent risk. Considering by default the car has depreciation, and that such depreciation is already considered at a certain cost item, the cost of capital of owning a car, is then the income that the car owner could have obtained with the money spent on such car. One example could be a common standard interest rate in a deposit account.

Running costs

Fuel

The fuel costs depend basically on four factors, namely the distance travelled by the car, the price paid for the fuel, the energy efficiency of the car and the type of driving. In Western countries, this cost normally is the second highest after depreciation.

Maintenance

The maintenance of a car can have the purpose to be a long term or a short term maintenance. This cost might be very irregular and somewhat unpredictable but tends to increase with the age of the car. On this item are included

car parts This is a list of auto parts, mostly for vehicles using internal combustion engines which are manufactured components of automobiles: Car body and main parts Body components, including trim Doors Windows Low voltage/auxiliary ele ...

that need to be replaced after a certain period of time (for example every two years) or with a specific number of travelled kilometres or miles, like

tire A tire (American English) or tyre (British English) is a ring-shaped component that surrounds a Rim (wheel), wheel's rim to transfer a vehicle's load from the axle through the wheel to the ground and to provide Traction (engineering), t ...

s or filters.

Repairs and improvements

Repairs costs are completely unpredictable because they depend on the number and severity of car collisions, like dents repairing for example. These costs also refer to

spare part A spare part, spare, service part, repair part, or replacement part, is an interchangeable part that is kept in an inventory and used for the repair or refurbishment of defective equipment/units. Spare parts are an important feature of logistic ...

s substitution due to malfunctioning. On this cost item it might be included also the parts bought to improve the performance or the aesthetic of the vehicle.

Parking

The costs of

parking Parking is the act of stopping and disengaging a vehicle and leaving it unoccupied. Parking on one or both sides of a road is often permitted, though sometimes with restrictions. Some buildings have parking facilities for use of the buildings' ...

include all the money the user needs to pay to park their car. This applies normally to car parking lots, like in offices, public buildings, shopping centres or in the downtown; but also on the public space (normally in the inner part of some city) using

parking meter A parking meter is a device used to collect money in exchange for the right to park a vehicle in a particular place for a limited amount of time. Parking meters can be used by municipalities as a tool for enforcing their integrated on-street par ...

s. This cost might be relatively predictable, if the user for example has a monthly contract with some parking lot company, or if he rents a private parking space.

Tolls

toll road A toll road, also known as a turnpike or tollway, is a public or private road (almost always a controlled-access highway in the present day) for which a fee (or ''toll'') is assessed for passage. It is a form of road pricing typically implemented ...

, also known as a turnpike or tollway, is a public or private roadway for which a fee (or toll) is assessed for passage. Normally this applies to

motorway A controlled-access highway is a type of highway that has been designed for high-speed vehicular traffic, with all traffic flow—ingress and egress—regulated. Common English terms are freeway, motorway and expressway. Other similar terms i ...

bridge A bridge is a structure built to span a physical obstacle (such as a body of water, valley, road, or rail) without blocking the way underneath. It is constructed for the purpose of providing passage over the obstacle, which is usually somethi ...

s and

tunnel A tunnel is an underground passageway, dug through surrounding soil, earth or rock, and enclosed except for the entrance and exit, commonly at each end. A pipeline is not a tunnel, though some recent tunnels have used immersed tube cons ...

s but it might also apply, like in some cities such as

London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...

Stockholm Stockholm () is the Capital city, capital and List of urban areas in Sweden by population, largest city of Sweden as well as the List of urban areas in the Nordic countries, largest urban area in Scandinavia. Approximately 980,000 people liv ...

, to gain access to the city-centre. This cost might be predictable if the user passes the tolled roadway, a defined number of times per month.

Fines

A traffic fine or

traffic ticket A traffic ticket is a notice issued by a law enforcement official to a Driving, motorist or other road user, indicating that the user has violated Traffic, traffic laws. Traffic tickets generally come in two forms, citing a moving violation, suc ...

is a notice issued by a law enforcement official to a

motorist Driving is the controlled operation and movement of a vehicle, including cars, motorcycles, trucks, buses, and bicycles. Permission to drive on public highways is granted based on a set of conditions being met and drivers are required to fol ...

accusing violation of

traffic laws Traffic comprises pedestrians, vehicles, ridden or herded animals, trains, and other conveyances that use public ways (roads) for travel and transportation. Traffic laws govern and regulate traffic, while rules of the road include traffic l ...

. Traffic tickets generally come in two forms, citing a

moving violation A moving violation is any violation of the law committed by the driver of a vehicle while it is in motion. The term "motion" distinguishes it from other motor vehicle violations, such as paperwork violations (which include violations involving a ...

, such as exceeding the

speed limit Speed limits on road traffic, as used in most countries, set the legal maximum speed at which vehicles may travel on a given stretch of road. Speed limits are generally indicated on a traffic sign reflecting the maximum permitted speed - expres ...

, or a non-moving violation, such as a

parking violation A parking violation is the act of parking a motor vehicle in a restricted place or in an unauthorized manner. It is against the law virtually everywhere to park a vehicle in the middle of a highway or road; parking on one or both sides of a road ...

. These tickets almost always imply the payment of a certain quantity of money.

Car washes

The cost of

car wash A car wash, carwash, or auto wash is a facility used to clean the exterior, and in some cases the interior of motor vehicles. Car washes can be self-service, full-service (with attendants who wash the vehicle), or fully automated (possi ...

varies according to the frequency users clean their car, and with the price of each cleaning.

References

External links

{{Commonscat
Automobile costs calculator for AustraliaAutomobile costs calculator for CanadaAutomobile costs calculator for IrelandAutomobile costs calculator for the United KingdomAutomobile costs calculator for the United States
Personal finance