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Car Costs: Buy and replace or just hire?

It appears our 9 year old Fiat Punto is on its way out – after buying it a new battery (£40) and putting it in, we checked it worked. White smoke started coming out the exhaust. We then checked the oil dipstick and it looked like chocolate milk – a sign the head gasket has allowed anti-freeze to enter the engine. Research on the internet showed a new head gasket would cost between £300 and £450, but since anti-freeze has already entered the engine, it might need to be stripped down which would cost a lot more.

So, we decided to see if it was economical to replace it with another car (2nd hand or brand new) or whether to use hire cars/car clubs: we make around 14 trips a year (6 trips to Yorkshire @ 200miles each way, 6 trips to Leicester @ 100 miles each way, 4 trips to see friends @ 40miles each year = 3920 miles total: say 4,000miles for “spare”) and we live close to London so it might be worth it…. Here’s our figures:

Yearly running costs for the car
Road Tax £130.00
Insurance £304.00
M.O.T. £50.00
Breakdown cover £30.00
Total fixed yearly costs
(exc Petrol and repairs)
Petrol on 4,000 miles a year based on 5.7litres/100km at 116.8p/litre [4000 miles= 6437km/100= 64.37*5.7litres= 367 litres per year * 116.8] £428.66
Repair costs (guestimated average) £250.00
Total costs £1,092.66

Ouch! But how much would it cost for a hire car for the same sort of period?

Well, the journeys to Yorkshire and Leicestershire are typically weekend ones, so we’ll need to hire a car on Saturday morning and returning it Monday morning (as car hire places usually close at 5pm on Sundays – if they are open at all – and that’ll be too early). Avis has cars at £75.47 per weekend. The friends trips are same day, during the week, and that’s £110.00 from Avis – although I found another local company offering car hire for a single day at £40.00 and Streetcar offers £49.50 – so we’ll say £50 for a day).

So that’s

6 * 2 (14) weekend trips @ £110 each £1,540
4 one day trips @ £50 each £200
Total hire costs £1,740
Petrol on 4,000 miles a year based on 5.7litres/100km at 116.8p/litre [4000 miles= 6437km/100= 64.37*5.7litres= 367 litres per year * 116.8] £428.66
Total costs £2168.66

Even without adding petrol on top (most hire car places want you to pay for the petrol as well) – it’s already more expensive then owning a car (even taking into account repair costs!).

If we were to buy a second hand car for £1,500 (we’re actually looking at a third of this) and taking into account this “capital expenditure” the prices per year would be:

Running costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Buying 2nd hand* 2592 3685 4777 5870 6963 8028 9121 10214 11306
Buying new car* 8902 9685 10617 11600 12583 13565 14548 15531 16513
Hiring a car 2168 4337 6505 8674 10843 13011 15180 17349 19517

* = Second Hand card purchase price estimated at £1,500
* = New Cars do not need an MOT for the first 3 years of their lives. We’re looking at a Toyota Aygo which costs £8,220 “on the road” price, is taxed at “B” rate (which is £20), does not need any tax paying for the first year (this is included in the “on the road price”) and includes 1 year breakdown cover. Repair costs are estimated at £50 for the first year, £100 for the next year and then £250 for each consecutive year.

So as long as the car lasts us more than 1.5 years, it is more economical for us to have a car that sits idle for over 91% of its life than it is just to hire cars “as and when needed”. Even buying a new car is cheaper than hiring over 7 years.

Quite shocking and saddening really….