Car Value Assessment Model (Fisor)
A decision model designed to answer: 'Which car is the better financial decision over time?' It compares present value by modeling depreciation, maintenance, insurance costs, and inflation-discounted cash flows.
The Challenge
Car buyers often make decisions based on sticker price and monthly payments, ignoring the Total Cost of Ownership (TCO) over time. We wanted to build a tool that reveals the true financial impact of a vehicle purchase, accounting for the time value of money.
Our Approach
We built a comprehensive Excel-based assessment model that compares the Net Present Value (NPV) of ownership for different vehicles. Key variables included:
- Depreciation Curves: Modeled based on historical make/model data.
- Maintenance Schedules: Projecting costs for critical service intervals (brakes, tires, major fluids).
- Insurance Premiums: Estimated based on driver profile and vehicle risk group.
- Inflation & Discounting: Adjusting future cash flows to today's dollars to enable fair comparison.
The Outcome
The model proved that a vehicle with a higher upfront cost could often be the better financial decision when adjusted for lower depreciation and maintenance costs.
"Built a robust methodology to quantify long-term ownership costs beyond simple sticker price comparisons."