How to split the cost of a car between two people

Two people and one car is an extremely common arrangement and one of the worst-documented. Rent gets a conversation, the car gets a vague understanding, and the vague understanding is load-bearing for something that costs several thousand dollars a year and has a legal owner.

Fuel is the small part

Most households that share a car split fuel and consider the matter handled. Fuel is the cost that is visible, frequent and obviously attributable, which is exactly why it gets split and why splitting it is not enough.

Everything else on the list arrives annually, occasionally or invisibly: insurance, registration, inspection, servicing, tires, the repair nobody planned, parking, and depreciation, which is the largest cost of car ownership and the one that never generates a bill at all. Together these usually exceed the fuel, and every one of them lands on whoever happens to be on the paperwork.

🔧Write down the annual cost of the car, all of it, divided by twelve. It is almost always a larger number than either person would have guessed, and it is the number the split should be applied to.

Two separate decisions

The confusion in most shared-car arrangements comes from treating ownership and running costs as one question. They are not, and separating them makes both easier.

Running costs are about use. If one person drives four times as much, splitting the fuel and the servicing evenly is not obviously fair. A common arrangement: the fixed costs — insurance, registration — split evenly, since they are the same whether the car moves or not, and the usage costs split roughly by how much each person actually drives.

Ownership is about contribution, and it is a legal question rather than a fairness one. Whoever is on the title owns the car. That is true regardless of who paid the deposit, who makes the payments, and how the two of you think of it.

The conversation to have before buying

• Whose name is on the title, and why. Often it is decided by insurance pricing or credit rather than by intent, which is fine as long as everybody knows that is what happened.
• What each person is contributing to the purchase, written down. A deposit from one person and monthly payments from the other is a common arrangement and an impossible one to reconstruct three years later.
• What happens if you separate. This is the uncomfortable one and it is the whole reason to write the rest down. Sold and split, one person buys the other out at some agreed basis, or one person keeps it — any answer works if it was agreed while everybody was well disposed toward each other.
• Who pays for a major repair. Cars produce four-figure bills with no warning, and an arrangement with no answer for that tends to produce the answer 'whoever is least able to refuse'.

If only one of you drives

Worth stating because it is common and frequently unexamined: a car used primarily by one person, paid for jointly, is a shared cost delivering a benefit to one of you. That can be entirely reasonable — it might be the car that gets somebody to work, funding the household — and it should be a thing you both said out loud rather than a thing one of you noticed.

The version that causes trouble is where it is never named, because then the person driving feels watched and the person not driving feels like they are funding something they do not use.