You save €6,000 for your first car and feel that the goal is reached. Buying it also brings future running costs. If you leave them out of the plan, a car you could afford to buy may become a car you struggle to maintain.
Plan a full year of use alongside the purchase
Start by estimating how much you will drive
and why. Costs depend on distance, fuel consumption, parking and the vehicle's
condition. A professional inspection makes sense for a used car because a low
purchase price says little about upcoming repairs.
Include fuel, insurance and registration,
routine servicing, tyres, parking and any road tolls you need to pay. When
comparing car purchases, the CFPB stresses considering the total cost of
ownership alongside financing. [15]
The figures below are invented to
illustrate a calculation for a car bought without a loan. They are not market
averages. Before buying, replace them with estimates for your particular
vehicle and usage.
This averages €225 a month, although some
bills are paid only once or a few times a year. Including the purchase price,
the first year requires €8,700 in cash under these assumptions. A major
unexpected repair is not included.
Account for the loss in value too
If you could sell the car for €5,200 after
a year, it would have lost €800 in value. That sale price is also only an
assumption. Combined with €2,700 in running expenses, the simplified economic
cost of the first year would be €3,500. Do not add the purchase price again: in
this calculation, the change in the car's value takes its place.
For a loan or lease, check the initial
payment, total amount payable and final obligation separately. A smaller
monthly instalment spread over a longer period can mean a higher overall cost.
Compare the full agreement and ownership terms, not just the instalment. [15]
Compare options against your actual needs
A car may be essential for work or living
outside a town. You may also need one only at weekends. In that case, compare
public transport, car sharing and occasional rental. Account for time,
availability and reliability because the cheapest option is not always
workable.
Before buying, set aside the estimated
running cost for a few months. In the table's example, that is €225 a month.
This checks whether your budget can support it while building an initial
servicing fund. The exercise is useful even when parents contribute the
purchase price.
Money saved on a car can support your future
If choosing a suitable vehicle reduces
spending by €80 a month over time, the annual difference is €960. First use it
to cover the necessary car reserve. The remainder can serve another purpose,
such as education or assets for the future.
Some of that surplus could also go towards
gold or silver. Alongside regular spending on transport, you gradually build
ownership of metal. The usefulness of this approach lies in assigning clear
purposes to earnings; the metal's future value still depends on the market.
The goal for
a first car is transport that supports your daily needs and leaves room for
other choices. Before signing, work out how much it will require each month
after the initial excitement has passed. First step: Prepare an
annual running cost plan for your chosen car and compare it with your regular
income.
Sources
[15] Consumer
Financial Protection Bureau (2024). How do I compare auto loan offers
