Before buying your vehicle, you need to ask yourself the right questions: new or used? Credit or rental with an option to purchase or long-term rental? Ecological bonus or penalty?
The overall cost of running a car varies greatly, depending in particular on the model and the number of kilometers traveled. Excluding the purchase price of the vehicle, the annual cost of a small city car averages more than €3,000, or €250 per month, including insurance, fuel, maintenance, tolls, and parking, but not possible fines. It is therefore a significant monthly expense, to which the cost of financing is added for many individuals. Establishing a car budget before buying is therefore essential.
Make Your Car Budget
To estimate the annual cost of using the vehicle you are considering purchasing, start by establishing a car budget that will allow you to see things clearly. On the one hand, there are unavoidable costs such as car insurance, which depends on the driver’s age, length of insurance history, vehicle category, and other factors.
You will also need to consider vehicle wear and depreciation depending on how it is used, as well as the possible cost of a loan. In addition, you will have to pay registration fees, such as the registration certificate or “grey card,” which vary depending on the tax power of your vehicle, its age, any applicable ecological penalty, and the place of registration. In some cases, also plan for the cost of parking, especially if you live in the city.
Added to these are the costs linked to using the vehicle, such as servicing and routine maintenance. For example, for a small city car, these costs can amount to around €900 per year. Fuel is another major expense and represents an increasingly important part of the overall car budget.
Finally, remember to compare your car budget with the cost of renting a vehicle. Rental can be more advantageous if you only use a car occasionally or travel relatively few kilometers throughout the year.
Buy Your Car or Rent It?
This is one of the questions that arises, especially for those who use their vehicle moderately. In this case, you should take the time to compare Rental with Purchase Option (LOA), Long-term Rental (LLD), or even rental for a few days or a few weeks, during vacations, for example.
However, you need to pay attention to the cost of the excess in the event of an accident. There are solutions for total excess buyback, but they can be expensive and should therefore be included when calculating your car budget.
Purchase on Credit: Things to Check
To finance the purchase of a new or used car, a consumer loan may be required. This can be a classic loan or an “allocated” loan. An allocated loan finances the purchase of a specific good and cannot be used for a purpose other than the one for which it was contracted.
Whatever option you choose, you should pay attention to the interest rate offered, as well as the cost of any guarantees that may be required. Most importantly, make sure that the monthly payment does not put your overall car budget under too much pressure.
Insurance: A Sometimes Significant Expense
Car or motorcycle insurance includes a compulsory insurance component and optional coverage. The cost therefore varies depending on the type of vehicle, the level of coverage, and the driver’s insurance record.
Repeated accidents can also increase the insurance premium. For this reason, insurance should be included when calculating your car budget, alongside fuel, maintenance, financing, registration, and other regular expenses.
