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 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 – 37p for each mile driven.

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," says 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."