Breaking down car costs

31 January 2020

What does it cost to run a car? Well, it's not something with an easy answer. And, this is just passenger cars, commercial vehicle costs are a completely different story.

In Europe, the costs to run a car can range from €440 a month in Greece to €830 a month in Norway. Read more about how European countries compare in the 2019 Car Cost Index. There are a few common car cost factors. These are: depreciation, taxation, fuel, insurance and repairs and maintenance. So let’s dive deeper into each cost component

 

Depreciation

When looking at car running costs depreciation is quite often a forgotten factor when you own a car for personal use. But, for business cars you should always take it into account as it will represent your largest monthly car cost. Newer cars lose their value quickly and depreciation can represent anywhere between 32% to more than 50% of your monthly car costs.

Taxes

In Ireland car taxes are based on a car’s CO2 emissions and there are 12 tax categories (A0-G). What you pay per month in tax will depend on which category your car falls under. Taxes can range from €12 a month in the lowest bracket to €235 in the highest. You can find your category here.

 

Fuel

Your car’s fuel (petrol, diesel or electricity) accounts for around 14% of your monthly car costs. Here, choosing the right car for your needs is important. What you spend on fuel will vary per month it really depends on, how many kilometres you drive, your car's load, your driving behaviour, the area you live (road conditions) and the price of fuel in your area.

In some cases it might be more economical to drive electric over petrol or diesel and a relaxed driving style will always help save on fuel costs.

Insurance

Insurance costs like third party insurance are incredibly important, as they are mandatory, and represent around 12% of your monthly costs. Your insurance will also cover any damage related repairs.

Repairs & maintenance

General repairs, maintenance and tyre costs represent around 6-9% of your total monthly costs. If your car is under warranty, normally 3 years, repairs will be covered, but routine maintenance, inspections and services (tyre & oil changes) are not included.

Vehicle choice can also play a part in lowering your maintenance and service costs. Electric vehicles have fewer moving parts compared to internal combustion engine (ICE) vehicles so less maintenance is required.

 

Other costs you might expect

If you’re leasing you pay a small monthly fee for administration and customer support. If you have purchased your car with a loan you will need to pay interest each month. These two combined are around 5% of your monthly car costs

Of course, costs aren’t everything! Personal taste, driving experience, making sustainable choices and the way you initially fund your car are also important.