I think this is awesome and I like how you have accounted for all the costs properly.
The way non-rationalists would handle this problem is generally “hey can I borrow the car”. “keys get tossed”. “just throw me some money for [gas]”.
But as you probably have researched, gas is actually under half the cost depending on location. It’s probably about [$2.75/gallon [approximate 5-year average] / 35 mpg [2013 fit combined]] = 7.8 cents a mile. Maintenance has high variance but I use 5-10 cents/mile to account for this. [3-5 cents is what consumer reports says, 10 cents allows you to pessimistically account for very expensive repairs like a blown engine or transmission].
Mileage depreciation at 2 cents is quite low, but anyways 10 cents (maintenance) + 2 (depreciation) + 8 (fuel) = 20 cents per every mile driven, while paying just ‘gas money’ is under 40% of the true costs.
If you live in California, add $1 to the cost per gallon, which will increase costs by 3 cents.
We had previously borrowed their some car some, more informally, and reimbursed them approximately based on what it was worth. The main change here, though, is moving to a system where we can use the car without asking first, which is pretty useful to us.
Yeah. Thinking about it more, if you assess the probability that they ‘defect’ with your money as low (‘you know them well’), then you’re coming out ahead over renting the car from them at 56 cents a mile. I just recommend you at least text or email the details of this agreement and make the payment via a traceable means. Not the same security as notarized with multiple attorneys as witnesses but good enough for this transaction. (or to provide evidence to support your side in small claims)
Probably. Main thing is to not have any agreement backed up by “I thought you said...”. It needs to be written, and specific, and make a small claims judge think there is at least a 51% chance it’s true.
When I did math for commuting I used (15 years ago):
$0.10 / mile depreciation—based on buying a $13,000 used car and expecting to sell it for $3,000 in 10 years after driving 100,000 miles: number should be higher today.
$0.10 / mile for gas—based on ~28mpg and ~$2.80 /gal.
$0.03 / mile for oil/tires/normal replacements—based on spending ~$60 / 3,000 miles for an oil change and ~$200 / 20,000 miles for new tires.
$0.25 / mile for my time—assuming it’s mostly driving 60 miles an hour for a California commute at my at-the-time wage of $15/hr; adjust for your time value if using this to calculate commuting costs
Then I rounded it off to $0.50 / mile one-way, which is conveniently $20/month/mile for commuting. This let me easily compare potential rentals—and led to me moving in to apartment closest to the office, even though it was the highest nominal cost.
Ok, so the ’10 cents a mile for maintenance’, back checking, would be:
today it’s $400 for a tire change and you can get tires rated for 70k miles, let’s say they last only 60k.
0.667 cents
Oil is now about $70/10k miles, or 0.7 cents.
1.337 cents for consumables. So 8.663 cents for unforseen events, or each 100k miles, $8,663 in repairs.
A hybrid battery can be swapped for 2k, an engine can be replaced with a low mileage junkyard engine for about 2k-2.5k. A transmission can be swapped for about 2k as well. (for a low mileage one from a totaled vehicle)
It does sound like the repair cost is an over-estimate. Still, sometimes the simplest repair can be extremely pricey, I had leaking oil pan that cost $700 to get repaired in a hurry.
Those repair prices seem low, but we may just have an expensive mechanic and no inclination to try and DIY car stuff.
Personally, I’m on my third car (bought used from a dealer, so ~3 years old) in 20 years with a pattern of replacing the previous one the second time it has a repair bill over $200 (without doing the second repair), and having a 30 minute commute for most of that time.
Location and market dependent. There are large “engine swap” shops in some metro areas with specialists who advertise low swap prices. Bigger engines are more expensive.
I don’t like your algorithm. The design lifespan of a car is around 15 years, that is most parts are designed to last that long. More if a higher quality brand or low mileage. But mistakes get made—even highly reliable vehicles like a toyota prius have a couple of mistakes in their design. In the case of the prius, it has 2 main issues:
Blown engine head gaskets
Eventually, failed hybrid battery
The engine head gasket repair costs $1-2k. The hybrid battery is $2k if you swap it yourself for a new one, it’s straightforward given it’s a battery.
Point is you can see either failure at a point where every other component is in tip top shape. Like euthanizing a 25 year old because of a broken leg.
I think this is awesome and I like how you have accounted for all the costs properly.
The way non-rationalists would handle this problem is generally “hey can I borrow the car”. “keys get tossed”. “just throw me some money for [gas]”.
But as you probably have researched, gas is actually under half the cost depending on location. It’s probably about [$2.75/gallon [approximate 5-year average] / 35 mpg [2013 fit combined]] = 7.8 cents a mile. Maintenance has high variance but I use 5-10 cents/mile to account for this. [3-5 cents is what consumer reports says, 10 cents allows you to pessimistically account for very expensive repairs like a blown engine or transmission].
Mileage depreciation at 2 cents is quite low, but anyways 10 cents (maintenance) + 2 (depreciation) + 8 (fuel) = 20 cents per every mile driven, while paying just ‘gas money’ is under 40% of the true costs.
If you live in California, add $1 to the cost per gallon, which will increase costs by 3 cents.
We had previously borrowed their some car some, more informally, and reimbursed them approximately based on what it was worth. The main change here, though, is moving to a system where we can use the car without asking first, which is pretty useful to us.
Yeah. Thinking about it more, if you assess the probability that they ‘defect’ with your money as low (‘you know them well’), then you’re coming out ahead over renting the car from them at 56 cents a mile. I just recommend you at least text or email the details of this agreement and make the payment via a traceable means. Not the same security as notarized with multiple attorneys as witnesses but good enough for this transaction. (or to provide evidence to support your side in small claims)
They reviewed a draft for this post over email, which seems reasonably close?
Probably. Main thing is to not have any agreement backed up by “I thought you said...”. It needs to be written, and specific, and make a small claims judge think there is at least a 51% chance it’s true.
When I did math for commuting I used (15 years ago):
$0.10 / mile depreciation—based on buying a $13,000 used car and expecting to sell it for $3,000 in 10 years after driving 100,000 miles: number should be higher today.
$0.10 / mile for gas—based on ~28mpg and ~$2.80 /gal.
$0.03 / mile for oil/tires/normal replacements—based on spending ~$60 / 3,000 miles for an oil change and ~$200 / 20,000 miles for new tires.
$0.25 / mile for my time—assuming it’s mostly driving 60 miles an hour for a California commute at my at-the-time wage of $15/hr; adjust for your time value if using this to calculate commuting costs
Then I rounded it off to $0.50 / mile one-way, which is conveniently $20/month/mile for commuting. This let me easily compare potential rentals—and led to me moving in to apartment closest to the office, even though it was the highest nominal cost.
Ok, so the ’10 cents a mile for maintenance’, back checking, would be:
today it’s $400 for a tire change and you can get tires rated for 70k miles, let’s say they last only 60k.
0.667 cents
Oil is now about $70/10k miles, or 0.7 cents.
1.337 cents for consumables. So 8.663 cents for unforseen events, or each 100k miles, $8,663 in repairs.
A hybrid battery can be swapped for 2k, an engine can be replaced with a low mileage junkyard engine for about 2k-2.5k. A transmission can be swapped for about 2k as well. (for a low mileage one from a totaled vehicle)
It does sound like the repair cost is an over-estimate. Still, sometimes the simplest repair can be extremely pricey, I had leaking oil pan that cost $700 to get repaired in a hurry.
Those repair prices seem low, but we may just have an expensive mechanic and no inclination to try and DIY car stuff.
Personally, I’m on my third car (bought used from a dealer, so ~3 years old) in 20 years with a pattern of replacing the previous one the second time it has a repair bill over $200 (without doing the second repair), and having a 30 minute commute for most of that time.
Location and market dependent. There are large “engine swap” shops in some metro areas with specialists who advertise low swap prices. Bigger engines are more expensive.
I don’t like your algorithm. The design lifespan of a car is around 15 years, that is most parts are designed to last that long. More if a higher quality brand or low mileage. But mistakes get made—even highly reliable vehicles like a toyota prius have a couple of mistakes in their design. In the case of the prius, it has 2 main issues:
Blown engine head gaskets Eventually, failed hybrid battery
The engine head gasket repair costs $1-2k. The hybrid battery is $2k if you swap it yourself for a new one, it’s straightforward given it’s a battery.
Point is you can see either failure at a point where every other component is in tip top shape. Like euthanizing a 25 year old because of a broken leg.