The Cost of Owning a Car in Ireland
The AA Ireland’s 2019 survey of motoring finances revealed that running a family car for a year costs €10,593.26, which is down by €98.11 from the previous year. The AA publishes figures annually, showing the average cost of running a car, which includes but is not limited to, insurance, tax, repairs and running costs. The report (published June 2019) uses figures from the CSO’s Consumer Price Index , which outlines that the average cost of motor insurance has dropped by 6.7% since June 2018. While this is good news, the cost owning a car in Ireland, goes beyond the price tag of the car and the cost of insurance. We take a look at the expenses you can expect if you want to own a car and offer tips on how to be financially prepared.
When purchasing a car, it’s important to identify its carbon (CO2) emissions as this determines what emission band it falls under, which directly affects motor tax, VRT and fuel costs. If you have a car in mind, you can calculate how much you need to spend to get it on the road.
Vehicle Labelling
Helps predict the environmental impact of different cars
Since July 2008, a labelling system allows consumers to compare the carbon (CO2) emissions of new cars. The first section of the label shows the emission bands and identifies which band the car falls under. The second section of the label provides three important points of information for car owners:
• The amount of fuel required to run the vehicle over 18,000 kms
• The annual motor tax payable
• The rate of VRT payable on the vehicle
This labelling system also helps predict the environmental impact of different cars, through its familiar seven colour coded bands, which are also visible on many products such as washing machines, fridges and dryers.
To see an example of a vehicle label for BAND A, click on the link below:
http://www.askaboutireland.ie/aai-files/assets/Environment/Climate%20C/Change/Low-Carbon-A.pdf
If you know the car registration, click below to find out the CO2 emissions:
https://www.vrt.ie/vehicle-identity-co2-emissions/
Motor Tax
To drive a car on Irish roads you are legally required to pay car tax. The rate of tax for cars registered after July 1, 2008 is based on the emissions of the engine. Prior to this, cars were taxed according to their engine size. Now, choosing a more eco-friendly car has the added benefit of saving you money when paying car tax.
You can check the current motor tax rate of a vehicle by clicking on the link below:
https://www.motortax.ie/OMT/motortaxinforeg.do
Vehicle Registration Tax (VRT)
VRT is the tax you have to pay if you are importing a car from another country, and want to drive it on Irish roads.
Since 1 January 2020, a second component has been added to the calculation of vehicle registration tax. The Nitrogen Oxide (NOx) charge will be combined with the existing Carbon Dioxide rates to form the VRT payable. The charge is applicable to all Category A vehicles excluding electrics but including hybrids. Customers registering a vehicle after this date will have to provide evidence of the vehicles NOx emissions to finalise registration.
The NOx charge will be a component of vehicle registration tax as outlined below:
Carbon Dioxide charge + NOx Charge = Total VRT payable.
NOx is charged on the basis of milligrams per kilometre
NOx is charged on the basis of milligrams per kilometre as recorded on the Certificate of Conformity. In the case of heavy duty vehicles this will be milligrams per kilowatt hour.
Depending on documentation such as foreign registration certificates the figure may also be shown as grams per kilometre. This will not affect the tax due as Revenue will convert this to milligrams in the calculation at registration. The NOx charge is not currently included on the VRT Calculator on the Revenue website. Click on the link below to find out more and calculate your NOx tax:
Interest
If you’re taking out a loan or availing of a financing option on a new car you will be charged a rate of interest. It’s important you are aware of the final costs and total amount payable from the dealership, bank or credit union, because if you cannot meet these costs it’s likely your car will be repossessed.
Registration fees
When you purchase a new vehicle, the car dealership will register it at the point of sale. As part of this the dealer will pay the Vehicle Registration Tax and Value Added Tax to Revenue. Therefore, the total price you pay for the car includes the VRT and VAT. Be sure to clarify all of this before you sign anything and ask for a detailed receipt. You don’t want to be left paying the registration fees because of a miscommunication.
Insurance
It’s illegal and careless to drive without insurance. If you are thinking of buying a car, find out how much it will cost to insure it and factor this into your outgoings. At Liberty, we’ve made buying car insurance in Ireland simple and fair, with all the benefits you’d expect and more. Call us now on 1890 944 412 for quote. Acceptance criteria, terms and conditions apply.
NCT
The NCT fee for a full test is €55
If you buy a used car it will need to undergo an NCT on a regular basis, with tests due every two years for cars younger than 10 years. The NCT, introduced in 2000, was designed to ensure cars that are older than four years are still roadworthy. Getting your car serviced prior to the test will increase its chances of passing. Currently, the NCT fee for a full test is €55 and a re-test costs €28 (both fees are inclusive of VAT and maybe subject to change).
Running Costs
Consumers often calculate the cost of the car, including the insurance, tax, NCT etc but fail to factor in the cost of running the car. It comes as a shock later when they realise that they can’t afford new tyres or even fuel. It’s vital that you work out if you can afford to pay for fuel, tyres, oil, servicing and repairs before you buy your car.
The AA’s survey published how much it costs the average driver to use their car per kilometre. The average distance driven was estimated at 16,000 km a year and costs are calculated based on which emission band the car falls under.
Band A 16.67 cent p/km
Band B 20.60 cent p/km
Band C 21.87 cent p/km
Band D 25.70 cent p/km
Band E 28.56 cent p/km
Band F 30.40 cent p/km
For example, if you own a Band C car, you could pay 21.87 cent for every 16,000 kms you drive.
Running costs for the year: 0.2187 x 16,000 = €3,499.20
Basic maintenance, travel and repairs can add up and if you haven’t accounted for these costs in your budget you’ll be taking the bus.
Budget
Get to grips with a personal financial plan
If you are trying to figure out whether you can afford a car or not and you don’t already have a budget, it’s time to get to grips with a personal financial plan.
- Gather payslips and calculate how much money you receive every week or month, after tax and any other deductions.
- Next, calculate your regular outgoings, this step can take a little longer. Looking back over a previous bank statement might help. Outgoings include rent, mortgage, utility bills, childcare, groceries, insurance etc.
- Make a list of non-essential spending including nights out, hairdressers, clothes etc.
- Add up all your outgoings and deduct the figure from your income. How much is left? Is it enough to buy and run a car?
- Is it possible to reduce some of your non-essential spending?
- One option might be to look at a cheaper car or perhaps put off buying until you have saved enough money.
- Remember, you will also need some extra money in savings to pay for unexpected emergencies such as a new radiator or fan belt.
If you are unsure how to budget, click on the link below for a useful budgeting tool:
https://www.mabs.ie/en/how_we_help/debt_and_budgeting_tools/mabs_budgeting.html
Some consumers don’t look beyond the price tag and end up in major debt to cover costs. Do your research and work out if your dream car suits your budget. Be realistic. Maybe that four door coupé belongs in the five-year plan.
https://www.theaa.ie/blog/minor-drop-in-car-running-costs-but-insurance-crisis-continues/
https://www.theaa.ie/aa/motoring-advice/cost-of-motoring.aspx
https://www.cso.ie/en/releasesandpublications/er/cpi/consumerpriceindexmay2019/
https://www.theaa.ie/aa/motoring-advice/cost-of-motoring.aspx