How much does a car cost? A guide to the average cost of owning a car

Are you craving the freedom of a new set of wheels? The current economic uncertainty has caused some favorable conditions for car shoppers, making it much easier to get a great deal. If you’ve been thinking about purchasing a vehicle, now is the perfect time to evaluate all costs and understand your budget. But staying realistic is key—owning a car is still an expensive commitment. It’s important to understand what the average cost of owning a car is, before you fully commit.

The costs don’t stop once you’ve purchased your new vehicle, so we’ve calculated the costs of buying, maintaining, and operating a car to help you understand the full picture and get you on the road, whatever your budget.  

Recent trends show that cars are becoming more affordable in Europe. According to research, Europeans pay on average €27,500 for a new car. However, prices can vary significantly per country as some markets favor premium models. Here are the average car retail prices across Europe:

• Germany: ~€32,000 
• France: ~€26,000
• Spain: ~€25,000 
• Italy: ~€22,500 

Before you buy a new car, it’s important to be aware of depreciation. You should know that a new care will lose at least 20% of its value as soon as you drive it off the dealership lot. And that’s not all—new cars continue to lose roughly 10–15% of their value for every year thereafter. There are some ways to manage depreciation, such as investing in cars or certain models that hold their value over time, but generally it’s something you have little control over and have to embrace from day one!  

Of course, brand new cars cost considerably more than secondhand motors. For the extra money, you can rest assured that your vehicle is operating in top condition. But if you decide to opt for a secondhand car, you can save thousands, often walking away with a bargain.

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It depends! Buying an older car gives you more room for negotiation and you’re less likely to experience the pains of depreciation, but there are other factors to consider. You may find that maintenance and insurance costs are much higher. Yet, again—it all depends on the car.

In general, the numbers suggest that it’s worth buying a newish car and keeping it longer, as the annual cost of ownership goes down significantly every five years. 

You’ve found your dream wheels and put a plan in place to save for the cost of the car—but have you estimated the average annual cost to own a car? Here we look at the post-purchase expenses that you’ll need to build into your budget.

• Car tax, registration fees, and licenses. There are legal requirements when it comes to owning a car. Before you’re able to drive off, make sure you have paid any taxes, and registered your vehicle with the necessary authorities.  
• Car insurance. When it comes to insurance costs, the best way to find savings is to compare quotes from competing insurers. However, it’s one of those expenses that will generally be determined based on where you live and your age, especially if you’re under 25. The LeasePlan study found that the average price for car insurance in Europe is €80 per month.
• Car finance charges. Finance charges are fees you pay on your car loan or lease if you’re not buying your car outright. Depending on the size of your down payment, the length of your loan and your actual credit, you’ll have to shell out, on average, an extra €3600 a year on finance costs. So,while smaller monthly payments on car loans may be tempting, they add big costs in the long run! 

Some good news here: if you’re buying a brand new car, you probably won’t have to cover any repair costs for the first few years. The three-year/60,000 km factory warranty should take care of any unexpected expenses. 

For those eyeing an older model, the average maintenance costs hover around €1,000, but could easily be double that if the car is more than a few years old. It’s highly recommended to set aside a monthly budget for repairs, especially if your car doesn’t have any warranty. 

No matter how many miles you’ve driven, it’s recommended to replace tires every six years (if you’re not required to change tires by season). It will cost you around €100 to €200 to replace all four tires. 

With the fuel costs rising by 5% in 2019, the overall costs of owning and driving a car have gone up again. The average monthly fuel cost in Europe is €100 for petrol and €70 for diesel. Italy is the most expensive place for petrol (€136) thanks to a high fuel tax. 

To estimate how much you’ll have to pay for fuel each year, you need to consider things like road conditions, the price of gas where you live and the miles per gallon or liter that you get with your car. Do you know roughly how many miles you drive each month? Divide that number by your car’s fuel economy rating and then multiply it by the gas price per gallon or liter in your area. 

Now that the total costs of car ownership are clear, find out how to budget properly to reach your goal.

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There’s lots to consider when buying a car, beyond the price of the car itself. But budgeting is easy when your bank is on your side. The N26 Standard bank account makes budgeting simple with automatic transaction categorization and a neat overview of your spending. Now you know exactly where your money is going, you can choose where to cut down your spending in order to reach your savings goals. 

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