The real cost of owning a car

Owning a car is more expensive than what it seems. Even a cheap car can turns out to be a very expensive deal. Additionally, cars require not only a one off big expected expense (mainly taxes and insurance) but they can also mean non-expected significant expenses. Also, in particular for new cars, the money that you “spend” on devaluation is very significant.

Check my calculator (the-real-cost-of-owning-a-car) with 2 examples and feel free to play with it. The values on the excel sheet are in Euros and they should be considered as pretty representative examples of the European reality. In the calculator I assume that the car will be sold after 5 years at a certain price that can be defined.

A new car with a price of 26k will cost, on average, 500 Euros per month and even a cheap used car with a price of 5k will cost more than 300 Euros per month. Are you sure you can’t find other options to travel around? I understand not everyone can walk to work or go by bike (luckily I can go by bike) but please analyse all public transportation options. Public transportation monthly tickets normally pay off, in particular in Europe, which is the reality I am most familiar with. In Frankfurt, the monthly pass is 85 Euros per month, but, if you pay annually, you get 2 months for free, which means that you are actually paying only 71 Euros per month. These discounts are quite common in other cities as well. What can you do?

  • Be aware of the costs associated with owning your car. Yes, even a cheap car is expensive!
  • Analyse public transportation options and discounts associated with it
  • Move closer to work. If you live together with your partner, try to move at least close to either your work or his/hers to avoid paying 2 monthly tickets. Another reason for renting instead of buying: flexibility in dealing with other costs
  • Check other options for when you really need a car, i.e., going somewhere without public transportation or if you want to travel for the weekend. You should be able to find cheap rental places. When we need a car for a few hours (hardly ever, only for very specific reasons like going to Ikea), there is an app that allows us to pick up some cars that are parked in the city for 3 Euros per hour + 0.26 per km. When we need a car for the weekend, we check only the cheapest car available and we book it, normally at around 30 Euros per day.

Another reason for renting a car when you need one instead of buying is that also you can take into account the costs associated with the car in the travelling you are going to made. When you own a car and you travel for one weekend, it may seem you are travelling for free, except the cost of gas, but actually you are not. When I rent, I know I have to spend additional 60 Euros, which I take into account in the total cost of travelling. I have no unexpected costs now which allow me to predict much easily how much I can spend and save.

Do you agree with this approach or think it is absolutely impossible to live without a car?

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