Does a different car make sense?

With the rising expense of gas and travel, many people are turning to personal assistants to handle a lot of the errands and day to day travel, which great for building a client base and bringing in revenue, however it is also more expensive to drive every mile.

If personal assistants use vehicles that tend to get lower gas mileage these expenses can really eat into profits very quickly, even if the client is paying a mileage allowance. Typically most clients will pay state or federal rate mileage if that is in your contract agreement, however if you vehicle is more expensive to operate your revenue will definitely decrease.

Knowing what the cost is to operate your vehicle is important from a business perspective as well as a financial standpoint. Operating costs include all the expenses in relation to your vehicle and are not just limited to fuel and purchase prices. The operating cost of a vehicle is calculated by determining the price of the vehicle, fuel used per mile, miles traveled, cost of repairs and maintenance as well as the cost of insuring and licensing the vehicle. It can also include toll road fees, parking fees or storage payments made with regards to the vehicle. The more that any one of the cost factors increases, the more expensive it will be to operate the car. Typically fuel costs will be the most variable and they are calculated by dividing the cost of the filing the tank by the number of miles you drive on the tank of fuel. For example if you have a 10 gallon tank and gas is $4.00 per gallon, it will take $40.00 to fill your car. If you are able to drive 200 miles on a tank, your miles per gallon calculation is 200 divided by 10 or 20 miles per gallon. You can then further break this down to $4.00 gallon/20 miles for a total cost for fuel of 20 cents per mile.

In addition tires are typically changed based on mileage, so the more you drive the quicker tires will need to be replaced, leading to a greater expense per mile. Repairs are also somewhat based on mileage with oil and maintenance based on the wear and tear on the vehicle. Repairs may be partially covered by insurance or warranty for the first few years of owning the vehicle, but eventually the owner will be required to cover the cost. Insurance rates will vary based on the type of vehicle you drive, accidents on your record, where you live and if your vehicle is insured for business.

Fixed costs include expenses associated with operating a vehicle such as the car payment, depreciation on the vehicle and items like title and driver's license fees. Adding all the fixed costs with the variable costs will give you the total cost of operating your car per year. A few websites that do most of the work for you with regards to determining your cost of operating your vehicle include:

· https://www.extension.iastate.edu/agdm/crops/html/a3-40.html with a handy spreadsheet calculator

· http://www.myotherride.org/cost.html - with basic calculations

· http://www.csgnetwork.com/annualmpgcalc.html - gas cost per year

The American Automobile Association (AAA) estimates that in 2007 the cost of owning and operating different types of vehicles driven 20,000 miles per year were:

· Small sedans/economy cars - 37.6 cents/mile

· Medium sedans - 48.4 cents/mile

· Large sedans (luxury vehicles) - 56.5 cents/mile

With gas prices continually increasing the costs of operating a vehicle continue to rise. Vans, SUVs and full sized trucks all tend to have much higher operating costs than cars, which can really add up. Buying or leasing a lower cost car that has better gas mileage (ideally over 30 mpg average), lower insurance rates and lower maintenance rates is definitely a way to increase your profit margins. There are several sites on the web that offer comparisons between vehicles with regards to gas mileage and operating costs and some good places to start your research include:

· http://www.fueleconomy.gov/feg/sbs.htm · http://www.edmunds.com/

· http://www.aaa.com/