UK consumers could afford a larger or better-equipped car if they calculated vehicle finance based on long-term ownership costs, rather than focusing just on the car’s initial purchase price.

According to Glass’s, few buyers consider the full cost implications of car ownership, ignoring predicted levels of depreciation, insurance and fuel costs before they buy.

Glass’s suggests that by calculating finance arrangements on the ‘whole life’ cost of their prospective purchase, most buyers would realise they can actually afford a car with a higher initial purchase price.

For example, a three-door Renault Clio 1.4 16V Expression costs £9,050 when new, significantly less than that of the larger five-door Renault Megane 1.5 DCI (80) Authentique, which is £11,790. However, due largely to their different rates of depreciation, after three years and 30,000-miles both will have cost their owners the same amount – 37 pence for each mile driven.

Predicted whole life costs take into account depreciation and the expected cost of vehicle excise duty, fuel, insurance, service and repair.

Glass’s says a lower pence-per-mile figure can often help to cancel out the additional cost of finance if the buyer’s preferred vehicle is more expensive. “Consumers tend to be seduced by the sticker price, but they ignore depreciation and longer-term running costs at their peril,” comments Jeff Paterson, Senior Car Editor at Glass’s.

“Many are put off by the comparatively high purchase price of prestige badge cars, but whole life cost analysis consistently demonstrates that they are less expensive than people think over the typical period of ownership. Diesel cars are also particularly good news at present, as depreciation, insurance and running costs normally remain low.”

Example upgrade options – whole life cost comparisons

NB: All of the following whole life costs are based on three years’ ownership, with each vehicle covering a total of 30,000 miles

ConvertiblesVehicle

Purchase price

Whole life cost (pence-per-mile)

Option 1Vauxhall Astra 2.2 Convertible

£19,272

62 ppm

Option 2Audi Cabriolet 1.8T

£24,250

59 ppm

Note: The Audi looks far more expensive than the Astra until the buyer takes account all ownership costs, not just the purchase price.

Executive saloonsVehicle

Purchase price

Whole life cost (pence-per-mile)

Option 1Peugeot 607 3.0 SE auto

£29,090

113 ppm

Option 2Mercedes-Benz E320 Elegance auto

£34,435

97 ppm

Note: The purchase price of the Mercedes is much higher, but it actually costs significantly less on a pence-per-mile basis compared to the Peugeot.

Large SUVsVehicle

Purchase price

Whole life cost (pence-per-mile)

Option 1Land Rover Discovery 2.5 TD5 Pursuit five-door

£25,792

85 ppm

Option 2Volvo XC90 2.4 D5 S five-door

£29,450

74 ppm

Note: The Volvo has a higher purchase price, but a lower rate of depreciation means it costs significantly less to own compared to the Land Rover.