Comparing Total cost of ownership

Danny_k75

Hi all,

I'm trying to determine the best approach for comparing the total cost of ownership across different cars and purchasing options.

For example:

• Keeping my current car
• Leasing through a work scheme
• Buying a car with a loan

I'd also like to understand what age of car offers the best value, taking into account depreciation, repair costs, and other ownership expenses.

Are there any good websites or tools that can comprehensively compare these costs, or is a custom spreadsheet the best way to go?

Thanks in advance for any insights.

saveallmymoney

Google Gemini was excellent for me when car shopping recently. You can ask general questions or copy / paste auto trader results into it and ask for specific views on cars.

Arunmor

The one great unknown that you will have to research historically and then suck it and see is residual value, coupled with how long you plan on keeping the car (I find the last part easy as my length of ownership is defined as when it leaves home on the back of a low loader).

A trawl through autotrader, Parkers etc will give you some idea today as will final PCP balloon payments but nobody has a crystal ball. The rest is easy just work out the numbers.

born_again

I'd also like to understand what age of car offers the best value, taking into account depreciation, repair costs, and other ownership expenses.

That's a no brainer. A EV when you have home charging. 2p a mile.😍

2nd hand, so you get rid of the largest chunk of depreciation. (3 years is around right (maybe)) Servicing is far cheaper (Tesla none)

Exodi

https://forums.moneysavingexpert.com/discussion/6667120/comparing-total-cost-of-ownership

I think there is a lot of detail that is missing to help.

Obviously if you already own a car outright, that would be cheaper than paying anything towards a new one?

You mention leasing a car through a work scheme, it would be useful to understand more about that. Is it a company lease, SalSac car scheme, etc?

Likewise with buying a car with a loan, why would you not consider a PCP instead which can often be cheaper (as it is secured lending instead of unsecured)?

Also, if the company is offering car subsidies via a work scheme, are they, or would they, also pay a car allowance?

I think it's important to know all of this to do a fair comparison. Once you have it, I think it's just worked out in half hour with a spreadsheet.

Bigphil1474

I did a custom spreadsheet last year when I was looking. There's so many variables .

One thing I nearly missed was the pension hit on the work lease scheme which was fairly hefty - no doubt one of the things that attracts the employer along with reduce NI payments. In the end, I worked out my current owned outright 8 year old car is still miles ahead in terms of financials. Gonna think again in a couple of years.

Exodi

https://forums.moneysavingexpert.com/discussion/comment/81988780#Comment_81988780

Can not upvote enough.

My last company lease was an EV, initially because the difference in BIK percentage (the below was from my analysis in 2023).

To get the same PHEV I had at the time (a Toyota Corolla Touring Sports Icon Tech), p11d list value of £31,560 and a BIK percentage of 25% meant a cash equivalent benefit of £7,890. As a higher rate tax payer, this meant I'd be paying £3,156 of tax per year (or £263 per month) for use of the car.

To get an EV (I ended up getting an MG5 EV), p11d list value of £33,985 (so similar) and a BIK percentage of 2% meant a cash equivalent benefit of £679.70. As a higher rate tax payer, this meant I'd be paying £271.88 of tax per year (or £22.66 per month) for use of the car.

A saving of ~£240 per month in my pocket. A no brainer.

Admittedly I did have to pay ~£1k to have an EV charger installed at home (it was only an ROI of 4 months so in my eyes it was no problem) and the alterative (charging at work for mixed usage) was not ideal.

The icing on the cake as @born_again touches upon was then moving to a home EV tariff. My current EV has a 61kWh battery. Assuming a relatively conservative 3 miles/kWh, gets a range of 183 miles. The cost to charge on my current EV fix (3.5p/kWh) would be 61*0.035 = £2.14… that works out to about 1.2p a mile. My previous car worked out to over 10x that. So not only was I saving £240 a month, I was paying £8 a month in fuel, compared to around £100 a month.

The savings were staggering. It gets better if I do work trips because I am reimbursed for the electricity at the Advisory Electric Rate (currently 7p/mile).

This is why it goes in one ear and out the other when people doom-monger about EV's and try to hit me with 'gotchas' which are usually ridiculous scenarios of "but what if you needed to drive to Inverness and back one day?".

I admit, it's not all upside. The range on the car does mean if I'm doing any journey longer than the batteries capacity I'm often forced to charge at a motorway service station at an eye-watering 85p/kWh (or 28.3p a mile, 23.5x more than charging at home and double the cost of fueling an ICE vehicle). If you are regularly doing long journeys and have no access to private charging along the way (e.g. at an office), the public charging rates may swallow up any savings.

Also I'm relatively privileged in the sense I have a driveway and can install a home charger - if I couldn't then I wouldn't get the big benefit from home EV tariffs (though even from tax alone it would be worth it for me).

Then there's the more general issues - lack of EV charging, stopping at service stations on low battery to find of the only 4 EV chargers, 2 are out of order and 2 have ICE vehicles parked in them with no idea when they'll be back… on occasion I have had to park up nearby and stare at the EV charging bays (before realising several EV's nearby who are doing the same). There is better infrastructure now, and google/zap map/etc can show you how many chargers are at a site, how many are in use, out of order, etc, so with a bit of planning you can ensure you stop at a good site and don't usually need to wait. That said, despite people hearing this and thinking "what a nightmare, I could never", the few hours I spend across a year waiting for a charger is easily justified by the ~£4k in savings I make a year. I've yet to have it happen this year (but I plan much better now and infrastructure has improved, most sites have 8+ charges instead of 2!).

And, BIK rates have gone up in recent years (3% in 25/26, now 4% in 26/27) and are set to continue increasing. This is a bit of a red herring though as the same happens with all vehicles and even if it didn't we are talking about ~£11p/m increase in tax as per my example above - plenty of room considering the ~£240 difference!

Really I think an EV is a no brainer for everyone who has a company car, but prepare yourself as there is a lot of naysayers - I don't really mention I drive an EV because I can no longer be bothered to defend it to someone that has never tried one, thinks I spend my life waiting for it to charge and thinks they're blowing up left and right. Ironically as I can charge it while I sleep, I likely spend less time devoted to 'fuelling' my car than they do, as in most cases it happens while I sleep.

paul_c123

https://forums.moneysavingexpert.com/discussion/comment/81988780#Comment_81988780

An EV is NOT a no brainer if the mileage is low, because the savings in fuel cost are typically offset by a higher purchase price. There is still a need to evaluate all the other likely costs over the lifetime of the car.

Depending on mileage, depreciation is probably going to be the highest cost.

MattMattMattUK

https://forums.moneysavingexpert.com/discussion/comment/81988948#Comment_81988948

I agree there is a need to evaluate all options, but in many cases there is no real difference between the price of a used equivalent used EV vs ICE. The reason the myth persists is apart from the Leaf and Zoes most mainstream EVs were in higher segments so had higher prices, so if someone compared price of all EVs with all ICE vehicles the price would be higher, but that ignored the segment the vehicle was in.

Effician

I'll stick with the 2014 260k mile passat for the time being, we've had it a year now , it owes us £1400 & pretty much zero depreciation on it.

Paying £35/ yr ved & £250 ins, we only do 2500 miles /year ( & reducing) so approx £500 in diesel at today's rates, most of these costs are covered by the £15k car fund earning 4% in our local bank. meaning we're close to £200/yr total cost of ownership

I am very tempted with a used EV for around £15k but it makes no sense at all for us financially . We have however converted the bikes to e-bikes to make good savings on fuel & travel time around town.

Danny_k75

https://forums.moneysavingexpert.com/discussion/comment/81988867#Comment_81988867

To add more context:

• The salary sacrifice scheme we use is Tusker. I've looked at a few options — for the mid‑range cars I'd be interested in, prices start at around £600/month. BMWs and Mercedes are eye‑wateringly expensive.
• PCP is certainly an option to consider.
• I don't think a car allowance is available in my role.

I test drove a Peugeot E‑5008 today. It was OK – quite slow, but the interior was decent. However, it doesn't seem good value compared to keeping my current car.

My current car: 2013 E350 Diesel Estate, 130,000 miles. I've had it for about 5 years. In the last year alone, I've had some expensive bills – around £1,000 for suspension parts. But even so, keeping it still feels cheap compared to buying new, mainly because depreciation is now extremely low.

I only do about 5,000 > 7,000 miles a year.

Thanks again for all the input – very helpful.