With the economy struggling, and fuel prices climbing, everyone is looking at how they can save some extra money.
For many, driving is a necessity and they simply cannot give up their car. As a result, many people are thinking about downsizing.
This simply means selling their existing car, and buying something newer that’s less expensive to run. It might be smaller, more economical, cheaper to tax or cost less to service. Either way, the aim is to cut the amount of money being spent.
Working out exactly how much you could stand to save by changing your car, however, can be tricky. This is where the Parkers Cost of Motoring tool can help.
It takes into account all the factors that you need to consider when you’re trying to calculate any potential savings. Aspects like depreciation, road tax, fuel and servicing are all automatically displayed when you’ve made your choice of cars, allowing you to instantly see where the savings may lie.
It’s critical that you do this when considering buying a new car to save money. Besides the initial expensive outlay of buying a new car, which may wipe out any potential savings, your existing car may well cost less to run over the same period.
Say, for example, you have a 2007 Ford Mondeo with a 1.8-litre petrol engine. It’s worth about £4,000 and averages around 37mpg. You’re thinking about downsizing, and happen to spot your local Vauxhall dealer advertising a Corsa that’s claimed to return 67mpg. The price is tempting too, with it on offer for £11,500.
Sensing a massive monthly saving, you sign the dotted line on the Corsa and sell your Mondeo. Straight away, your new car has already cost you £7,500. Even if it saves you a considerable amount each month, in terms of running costs, it’s still going to take a long time to claw that difference back.
Then comes the second bit of bad news – depreciation. Because the Corsa is new, it will lose more of its value than the older Mondeo. That takes a considerable chunk out of any savings that you previously stood to make. This means that, although the diesel Vauxhall is cheaper to run, it’ll cost you approximately £2,336 more to own. That’s assuming you cover 10,000 miles a year, for three years.
As a result, the Corsa could cost you almost £10,000 more to buy and own than simply sticking with the Mondeo. You might even save more, if your Mondeo stays problem-free and doesn’t require any major work.
So, if you’re thinking about buying a new car to save money, use the Parkers Cost of Motoring tool to check the figures. You may, in fact, stand to save more by simply sticking with your current car.
You could also consider buying a newer, more efficient, used car. This gives you the opportunity to dodge the heavy hit that is depreciation.
The below screenshot, from the Parkers Cost of Motoring tool, demonstrates the difference in running costs between the new Vauxhall Corsa and the used Ford Mondeo. The figures are based on an ownership of three years/30,000 miles.
Note: The Cost of Motoring tool is updated constantly so the figures may change according to market conditions.
Parker’s Top Tip
You can compare both new and used car running costs by using our Cost of Motoring tool. If you’re thinking about changing your car then find out what it’s worth by getting a Used Car Valuation, and research the replacement cars that might interest you in our New Car Reviews section.
