Updated: May 22, 2020
Buying a car is a popular financial goal for Pinoys, especially for young urban professionals. And banks have made it easier to purchase one through car or auto loans.
Just save up for the downpayment, then apply for a loan and pay the balance as installment for the next several years. In the corporate world, some companies can even shoulder a portion of the purchase cost as part of its employment benefits.
While it has become easier to buy a car these days, keeping up with the costs of owning one has become harder. The rising price of fuel is just one of several costs that’s making it more expensive to maintain a car today.
So before you buy that car, keep in mind this list of expenses, which you’ll have to budget for. Beyond your car loan monthly payments, make sure that your income and cashflow can afford all these as well.
Your most obvious expense for owning a car would be fuel costs. Determine the total distance you’ll probably drive every month and you can estimate how much your fuel expense will be.
For example, if your office is 25 kilometers away from your home and you work 5 days a week, then that’s around 1000 kilometers of driving every month.
If the car that you’re planning to buy has a fuel economy rating of 20 kilometers per liter, then you’ll consume about 50 liters of gasoline. If gas is priced at P45 per liter, then that’s a monthly expense of P2250.
Of course, the actual cost will be higher because you’ll also use the car during weekends, and to go to other places other than the office.
Toll and Parking Fees
Car owners often forget to account for tollways and parking fees when computing their budget. You shouldn’t as this tend to be a significant amount.
For example, someone living in Alabang who works in Makati will have around P9600 worth of monthly expenses because of SLEX tollway and Makati parking fees.
Repairs and Maintenance
You need to have an oil change every 5000 kilometers, which will be every 3-4 months. Buy new tires every 4-5 years. And if you’re too busy, pay for car wash as well at least once a week.
There will be other preventive maintenance services that you’ll have to pay for. This largely depends on the brand and model of your car. And of course, this depends on your usage as well.
Assuming your car is in good condition, then you’ll spend around P30,000 per year for repairs and maintenance. This expense will slowly but surely go up as your car becomes older.
LTO and Registration Fees
A number of necessary expenses that will cost you around P3500 per year. This covers the annual LTO registration fees, emission testing costs, and the price of CTPL insurance.
Again, this can vary depending on the model of car you have.
The Compulsory Third Party Liability (CTPL) insurance is mandatory for the registration of a motor vehicle in the Philippines. However, getting car insurance is optional but otherwise recommended.
A comprehensive car insurance will cover auto accident repairs, bodily injury, and property damage. While this won’t happen every year, there’s no price for having peace of mind against such financial emergencies.
Comprehensive coverage premiums will vary, depending on your car’s model and where you’ll get it. On average, insurance premiums will cost P15,000 a year.
The Total Cost of Owning a Car in the Philippines
Assuming a monthly amortization of P17,000 for a 5-year term auto loan, and then adding up the costs mentioned above. Your total expenses for buying that car would be around P32,000 per month for the first 5 years.
Once you’ve paid your loan in full, then expect to continue spending around P16,000 per month or P192,000 per year from the costs mentioned above.
Please note that these figures are just estimates and based on March 2018 prices in Metro Manila. It’s still best to do your own research on the current costs and have your own computation.
For example, if you live and work outside Manila, then you probably don’t have toll and parking fees to think about. And your fuel and insurance costs would surely be different.
In any case, the real lesson here is that you should account for these expenses in your budget BEFORE you get that car. Remember, it’s not enough to check if you can afford to buy it; you also need to see if you can afford to own it.
Have a safe and comfortable drive!