October 2008
Behind the numbers
AT THE PUMP As depreciation drops, fuel is the largest owner cost for three-year-old cars.
Our five-year owner-cost calculations are based on the following:
Depreciation
To calculate this, we took the current retail price of the used car from CR's Auto Price Service and subtracted the projected wholesale value in five years.
Fuel costs
We used prices of $4 a gallon for regular gas and $4.20 for premium, which were close to the national average prices in early August. We assumed that vehicles are driven 12,000 miles annually.
Insurance
We estimated the cost of insuring an average driver, based on data from the Highway Loss Data Institute.
Interest
We assumed buyers purchased cars with 15 percent down on a five-year loan. Bankrate.com was the source for the average interest rate. A shorter loan term for used cars would result in even more savings.
Maintenance and repairs
We used data from our 2007 Annual Auto Reliability Survey to estimate what owners had spent on maintenance and repairs in a 12-month period. Using that data for each model year, we could see how maintenance and repair costs rise over time. On average, they range from about $1,750 for a new car to $3,500 for three-year-old models over five years. The survey gathered data on more than 675,000 vehicles.
Sales tax
We calculated this using the national average at the time of purchase.
Depreciation
To calculate this, we took the current retail price of the used car from CR's Auto Price Service and subtracted the projected wholesale value in five years.
Fuel costs
We used prices of $4 a gallon for regular gas and $4.20 for premium, which were close to the national average prices in early August. We assumed that vehicles are driven 12,000 miles annually.
Insurance
We estimated the cost of insuring an average driver, based on data from the Highway Loss Data Institute.
Interest
We assumed buyers purchased cars with 15 percent down on a five-year loan. Bankrate.com was the source for the average interest rate. A shorter loan term for used cars would result in even more savings.
Maintenance and repairs
We used data from our 2007 Annual Auto Reliability Survey to estimate what owners had spent on maintenance and repairs in a 12-month period. Using that data for each model year, we could see how maintenance and repair costs rise over time. On average, they range from about $1,750 for a new car to $3,500 for three-year-old models over five years. The survey gathered data on more than 675,000 vehicles.
Sales tax
We calculated this using the national average at the time of purchase.
Posted: September 2008 — Consumer Reports Magazine issue: October 2008
