The True Cost of Owning a Car (It's Not the Purchase Price)

The Number You Were Given Was Incomplete

You bought a car for €12,000. Ask what it costs and you'll probably say €12,000, or quote the monthly finance payment.

Neither is the answer. A car is not a purchase — it's a subscription with a large joining fee, and the recurring part is where nearly all the money goes.

Most people track fuel because it's visible and frequent. Almost nobody tracks the largest cost of all, because it never appears on a bank statement.

The Costs Everyone Counts

These are the obvious ones. They still get underestimated, because people quote a typical month and forget the bad ones.

Even at the low end that's roughly €1,700 a year — around €140 a month before anything goes wrong and before the car itself is paid for.

The Cost Almost Nobody Counts

Here's the one that dwarfs everything above: depreciation.

Your car is losing value every month whether you drive it or not. You don't feel it, because no money leaves your account. You feel it exactly once — the day you sell it and get less than you expected.

A rough shape of how it goes:

That's roughly €2,200 – €2,400 a year of value quietly evaporating on a €20,000 car — more than fuel and insurance combined for most drivers.

Depreciation is steepest at the start and flattens with age. That single fact is why buying a two- or three-year-old car is so much cheaper than buying new: you let someone else absorb the worst of the curve, and you get a car that's mechanically almost identical.

The Real Monthly Number

Putting it together for a modest, fully-owned used car:

€373 a month — for a car with no finance payment on it at all. Add finance and you're comfortably past €600.

That's not a criticism of owning a car. Plenty of people need one, and for them it's money well spent. But it's a very different number from "I paid €12,000 once," and it's the number your budget actually has to absorb.

Why Repairs Wreck Budgets

Look at that repairs line: €400 a year. Almost nobody actually spends €400 in a year.

They spend €0, then €0, then €1,600 when the clutch goes.

Repairs are lumpy, and lumpy expenses destroy monthly budgets — not because the average is unaffordable, but because the timing is unpredictable. This is precisely what sinking funds exist for. Set aside €35 a month into a car fund and the €1,600 clutch becomes an annoyance rather than a credit card balance.

If you own a car and don't have a car repair fund, you don't have a car budget. You have a car and a hope.

Where the Money Can Actually Be Saved

Buy used, not new. The single biggest lever by an enormous margin. A three-year-old car has already taken the steepest part of the depreciation hit while retaining most of its useful life. Shop your insurance every single renewal. Insurers reliably price-increase loyal customers. Getting quotes takes twenty minutes and is frequently the highest hourly rate you'll ever earn. The same logic applies to reducing your other monthly bills. Do the cheap maintenance on time. Oil changes and tyre pressure are trivially cheap compared to what they prevent. Deferred maintenance isn't saving money, it's borrowing against a bigger repair. Question the second car. Two cars means two of everything in that table. For households where the second car does low mileage, occasional taxis, car sharing or rental can genuinely cost less than €373 a month. Be honest about the finance deal. A low monthly payment stretched over seven years on a depreciating asset is how people end up owing more than the car is worth. Compare total cost, not monthly cost — the same trap as Buy Now Pay Later, just larger.

Frequently Asked Questions

How much should I budget for a car each month?

For a fully-owned used car, budget €350–€450 a month including depreciation, or €250–€300 if you exclude depreciation and only need the cash-flow figure. Add the finance payment on top if the car isn't paid off. Building in a repair fund of €30–€50 a month is what keeps a breakdown from becoming debt.

Is it cheaper to buy new or used?

Used is almost always cheaper overall, because depreciation is steepest in the first two to three years. A three-year-old car costs dramatically less to own per year while offering most of the same reliability. New cars can make sense for warranty coverage and predictable running costs, but you pay heavily for that predictability.

Should I include depreciation if I never plan to sell the car?

Yes. If you drive it until it's worthless, you'll eventually need to replace it, and that replacement has to be funded from somewhere. Counting depreciation is really just saving for the next car in advance — the alternative is financing it, which costs more.

Is leasing cheaper than owning?

Leasing usually costs more over the long run because you're permanently paying the steepest part of the depreciation curve and never own an asset at the end. It buys predictability and a newer car, which some people reasonably value. Compare the total annual cost against the table above rather than comparing monthly payments.

Run Your Own Number

Everything above is illustrative. Your actual figure depends on your car, your mileage, and where you live — so calculate it properly.

Go through the last twelve months of statements and add up every euro that went to the car: fuel, insurance, tax, servicing, parking, tolls, that one repair. Then estimate depreciation by looking up what your model sold for a year ago versus now, and add the difference.

Divide by twelve. That's your real monthly car cost.

Most people find it's somewhere between 1.5× and 2× what they assumed. Whether that changes your decision is entirely up to you — but you should at least be making the decision with the real number, the same way you would with any other large recurring expense.