True cost of your car per kilometre

Energy: track what the car uses

Energy cost depends on the powertrain. A combustion car burns fuel, an electric car draws from the grid or a home charger, and a hybrid does both. Recording only one understates a hybrid's running cost by whatever the other contributed. AAA's yearly figures treat fuel as a variable cost next to maintenance, repair and tyres.

• Log fuel in litres for a combustion or hybrid car, and charging in kWh for an electric or plug-in hybrid.
• Home and public charging usually have different unit prices. Averaging them without noticing changes the result.
• Home charging often arrives inside a household electricity bill, which makes it the easiest cost here to forget.
• If you charge somewhere you do not pay for, decide whether to value that energy or leave it out, and do the same every period.

A finance or lease payment hides the real cost

Cars are financed and leased far more often than motorcycles, and the monthly payment is the number most owners quote. It hides a lot. A loan payment partly repays capital, and says nothing about the depreciation you still carry at resale. A lease payment covers use and builds no equity. AAA lists depreciation and finance charges as two separate fixed costs, which is the split to copy.

1. If financed, count the interest and fees paid in the period as cost (only the interest, since the rest of each instalment repays the loan) and treat depreciation separately, as for any owned vehicle.
2. Include any balloon or residual payment due at the end of the term when you compare financing with buying outright. Leaving it out makes financing look cheaper than it is.
3. If leased, treat the full lease payment as a running cost and do not add depreciation on top. You hold no equity, so there is nothing to depreciate.
4. Say which of the three situations you are in whenever you compare figures. A leased car's cost per kilometre and an owned car's are not comparable without that label.

Four tyres arrive all at once

Tyres are the cost most often missing from a car's total. They are replaced so rarely that a whole year can pass without a purchase, which makes any single year look either inflated or too clean depending on where the replacement fell.

• Four tyres are one large payment, often on a different cycle from servicing.
• A year with no tyre spend is a year that borrowed from the next one.
• Seasonal tyre changes add the tyres, the swap and the storage.
• Wheel alignment and balancing belong here too, and are almost never remembered.

Recurring costs a car adds

Beyond the obvious lines, a car collects small recurring payments that feel trivial one at a time. List them, because none of them feels like a car cost when you pay it.

• Tolls, if your regular routes use them.
• Parking at home, at work or paid on the spot often enough to matter.
• Roadworthiness testing and the paperwork around it.
• Cleaning, whether a subscription or a habit.
• Consumables that are easy to forget: wiper blades, bulbs, screenwash, cabin filters.
• Anything you pay only because the car exists, such as a breakdown membership or a roof box you store somewhere.

Comparing the car with the alternatives

This is usually the question underneath the calculation. Comparing a per-kilometre figure with public transport, a smaller second vehicle or no car only works if you are honest about which costs disappear in each case.

• Use the full figure, including depreciation. A cash figure makes keeping the car look better than it is.
• Ask which costs really go away. Insurance and depreciation stop, and a season ticket starts. Some costs just move.
• Fixed costs do not shrink with less use. Driving half as much does not halve the total. It raises the cost per kilometre.
• If the comparison is close, cost probably does not decide it. Treating it as if it does gives you a number you will argue with later.

Shared and household use

A car used by more than one person breaks the simple version, because the distance and the spending stop belonging to the same person. Pick a convention once and keep it.

• Decide whether you are working out the cost of the car or your share of it, and label which.
• If you split, split by distance covered unless the fixed costs really are shared equally.
• A company car or an allowance changes which costs are yours. Leave out what you do not pay, and note that you did.
• Keep the convention the same across periods, or the trend measures your bookkeeping.

When to recalculate

The figure is most useful as a trend, and a trend needs several measurements without needing a new one every week.

1. Recalculate after a loan payoff or a lease renewal, because the structure of the cost has changed.
2. Recalculate after a year with unusually high tolls, parking or a major repair, and note why that period is unusual.
3. Recalculate before any keep, replace or give-up decision, using the full figure and the same category list as last time.