How much does your car (or cars) cost every year? If you’re like most people travelling Irish roads right now, you probably have no idea.
According to research published earlier this month by the Economic and Social Research Institute (ESRI), 72 per cent of motorists underestimate their annual motoring costs and by a substantial margin too.
As part of the study from the ESRI’s behavioural research unit, more than 800 motorists were asked to estimate how much they spent annually owning and running their car.
Then they were guided through a breakdown of expenses, including fuel or charging, insurance, tax, maintenance, parking, tolls and other costs to show how wrong they were.
When the cost of actually buying the car and the subsequent depreciation was excluded, the median estimate among drivers was €2,000 per year. But when the actual costs were totted up they were closer to €3,000.
Fuel was the largest single reported expense, with a median annual cost of €1,560, which means the ESRI report may not even reflect the new normal for Irish motorists.
If someone drives 16,000km annually, and a litre of fuel costs €2, then driving an average car at 12.4km per litre would see a motorist spend €2,580 on fuel alone over the course of 12 months.
If the actual price of fuel today is added to the other costs, it means there are many motorists who are spending well in excess of €3,500 on travelling from A to B to C in their cars.
That is, by any measure, a lot of cash – and remember it doesn’t include any car loans associated with the machines or any depreciation, so when they are factored in the annual cost for many will rise dramatically.
Fuel costs are likely to climb in the months ahead, while we have also seen the cost of tolls, parking and car insurance going in the wrong direction in recent times too.
But the good (ish) news is there are ways consumers can save.
1. When it comes to driving, the easiest way to save is to use it less. Now, in a perfect world you’d forget all about your car and rely on public transport and – better still – the humble bicycle and your feet to ferry you and your family about. But for many, many people that is not a practical solution and one that is infuriating to read so we won’t say it. But if you reduced the time spent in your car by 20 per cent – by walking or cycling sometimes – then you’d knock close to €500 off your annual costs.
2. We all know how much fuel prices have climbed since the start of the year. In January a litre of diesel cost about €1.70 – now it is closer to €2.10, a jump of 40 cent. If a typical motorist uses about 1,100 litres annually, it equates to a cash amount of €440. But there are variations from forecourt to forecourt and if you were clued into the prices in your neighbourhood you could probably shave 5 per cent off your annual cost, which amounts to annual savings of about €125.
3. An easy win is a change in how you put fuel in your car. Don’t just throw €20 or €40 worth of fuel in and don’t just fill it to the brim without thinking. Instead buy a set number of litres. If you get into the habit of buying 50 litres (or 10 or 20 or whatever) when you stop for fuel you will quickly become more aware of how much you are being charged and the price gaps between forecourts.
4. It is also possible to save a surprising amount by changing the way you drive. Don’t over-rev, drive in the right gear and keep your boot empty. Keep tyres at the right pressure, get the car serviced, do not use air conditioning and remove roof racks or roof boxes. Travelling at 100km/h on a motorway costs you a bit less than travelling at 120km/h and the arrival time will be almost identical. Do all of these things and you will see your fuel efficiency increase by another 5 per cent, which will save you a further €125 when spread over the year.
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5. We’ve heard many stories from readers in recent times about alarming and inexplicable jumps in the cost of motor insurance. The key thing when renewal time comes is not just to accept the initial quote you have been offered by your company or by your broker. They will claim the price is the best they can offer but other providers might be in a position to quote you a lower price because almost all companies value new customers more than they value existing ones. And once you have shopped around and got a better quote, go back to your current provider and give them the chance to match it. And if all that sounds like too much hassle, you could try chancing your arm by simply telling your existing provider that you have found a better value quote somewhere else and see if they will match it.
6. Be smarter about how you use your car. Think about how your day is likely to pan out and if you can combine multiple short journeys into one slightly longer journey – by going to the supermarket, dry cleaners and the pharmacy in one trip, rather than taking three separate journeys, you will save yourself money. Also ensure that everyone who needs to get to roughly the same location at roughly the same time are in the same car at the same time rather than travelling separately.
7. It can be tempting to delay getting the car serviced to save money – we have done it ourselves – but it is a false economy. By looking after your car today you reduce the need for expensive repairs tomorrow. And at the risk of stating the obvious, if your engine starts making weird noises or if mysterious warning lights on the dash start flashing, get them looked at sooner rather than later – a stitch in time and all that.
8. Think about tolls. On a one-off basis they’re fairly inconsequential but if you are taking toll roads several times a week or even a few times a month the cost can quickly mount up. So make sure you have the toll tag – not only is it handier and faster, it is also much cheaper. Using the M50 with the tag costs €2.60 compared to €3.80 as a one-off user. It’s also worth considering alternative routes. If you use toll roads just twice a week for short journeys, that cost can easily top €200 a year. We are not saying you should always avoid toll roads but at least be aware of how much they are costing you so you can decide if the handiness is worth it.
9. Please don’t get clamped – there are few worse ways to waste money than giving it to the clampers. Download the Payzone app on to your phone and make sure to use it when parking in areas where there are charges. And if you change your car make sure to delete the old one from the app or you will end up paying more than a tenner a year for absolutely nothing. And research the streets near where you are going to see which ones don’t charge for parking, or consider using park-and-ride facilities rather than parking on high-priced city centre streets.
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10. There is a lot of talk about the economics of EVs of late. They certainly cost less to run than petrol and diesel cars – and dramatically less if you have home charging and can rely on cheap or free offpeak charging to keep your car on the road. But they also are expensive. The longer you can keep your existing car on the road and running in an economical fashion, the more money you will save. The last thing you want to do is swap your fully functional petrol or diesel car for an EV just to save money on running costs. Before you do anything of the sort you should make sure you have calculated the total cost of owning the car – including the purchase price and depreciation.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.