Two cars at two prices, what the gap adds up to after ten years
Choosing between two cars, most buyers look at the price difference alone, then divide it by the months of an instalment plan or weigh it against their savings. But the dearer car usually costs more in every month you own it: more fuel, pricier servicing, a higher insurance premium, bigger tyres. This article adds the two gaps together over ten years, as a plain sum with no growth or return assumed, so you see the whole figure before you decide.
Why ten years
Because a car stays with its owner for years, not months, and small monthly differences only show when they are added up. If you expect to change cars after five years, use five. The method is the same; what matters is counting over the time you will actually keep the car.
What goes into the sum
- The purchase gap, at the cash price rather than the total of instalments.
- The fuel gap: kilometres per year ÷ 100 × each car's consumption per 100 km × the price per litre.
- The servicing gap: from each dealer's maintenance schedule, or from asking people who own the model.
- The insurance gap: get a quote for each car from the same insurer.
- The tyre gap: the price of a set for each car × how many times you will replace them in the period.
- The annual licence fee: ask the traffic department for each car, and add any difference.
The sum uses today's figures for all ten years, unchanged, with no increase or decrease assumed. Prices will move, of course. When they move a lot, redo the sum with the new figures rather than trying to forecast them.
A hypothetical example in EGP
Someone in Cairo is comparing a car with a cash price of EGP 1,250,000 and another at EGP 1,650,000, and drives 15,000 km a year. The first uses 8 litres per 100 km, the second 10, and fuel in this example costs EGP 20 a litre. Every figure here is hypothetical and only illustrates the method; put the figures of your own two cars in their place.
| Item | Car one | Car two | Gap over ten years |
|---|---|---|---|
| Purchase price | 1,250,000 | 1,650,000 | 400,000 |
| Fuel per year | 24,000 | 30,000 | 60,000 |
| Servicing per year | 12,000 | 18,000 | 60,000 |
| Insurance per year | 30,000 | 40,000 | 100,000 |
| Tyres, three sets | 30,000 | 48,000 | 18,000 |
| Total | 638,000 |
The fuel line works out as 15,000 ÷ 100 × 8 = 1,200 litres a year for car one, EGP 24,000, and 1,500 litres for car two, EGP 30,000. That is EGP 6,000 a year, or 60,000 over ten years.
What the figure means
The gap on the showroom floor is EGP 400,000. The full gap over ten years is 638,000, so running costs alone added 238,000, more than half the price difference again. Divided over 120 months, car two costs about EGP 5,317 more in every one of those months.
To bring that closer to home: for a household that spends EGP 20,000 a month, the total would cover about 32 months of its costs. None of this says the dearer car is always the wrong choice. It may be safer, or suit a large family or long trips better. The point is to decide knowing the full price of the decision, not only the price on the day you buy.
The resale price at the end
The dearer car may sell for more when you part with it. If you want that in the sum, do not guess a percentage. Look up today's listings for ten-year-old versions of both models, take the difference between them, and subtract it from the total. If that difference were EGP 150,000 in our example, the net gap would be 488,000. If you cannot find enough listings, leave this line out rather than resting the decision on an estimate you cannot back up.
Common mistakes in the comparison
- Comparing monthly instalments instead of cash prices. An instalment spreads the price gap across many months and hides it, and the total you pay on instalments is usually more than the cash price.
- Forgetting insurance. It is paid once a year, so it drops out of the monthly picture, yet in our example it is the biggest gap after the purchase price.
- Using a lower mileage than you really drive. Check the odometer on your current car to see how far you go in a year.
Where Masareefy helps
You need no special tool for this sum; paper and a calculator will do. The numbers get better when they come from your own life, though. Log everything you spend on your current car in Masareefy, fuel, servicing and tyres, under one category, and record the insurance as a yearly bill. After a year you know what your car really costs, and you have a baseline for the next one.
Questions people ask
Should instalments go into the comparison?
Compare cash prices first, to see the gap between the cars themselves. If you will buy on instalments, then add to each car the difference between the total you will pay and its cash price, because that is part of what the car costs you.
What if the dearer car uses less fuel?
It happens. The fuel gap is then negative and comes off the total, which is why every line is counted instead of the price alone.
Should I use today's fuel price even though it will change?
Yes. This is a comparison between two cars, and a change in the fuel price affects both. Redo the sum when the price moves a lot.
Log your car's costs in Masareefy under one category, so your next comparison runs on your own numbers.
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