Expenses for Cars You Should Prepare for as a New Car Owner

It’s a common misconception among new car owners that car expenses will slow down once they pay the down payment. However, the fact is that cars come with recurring costs.

Because some car owners don’t anticipate this, they may get overwhelmed by the overheads until they find it difficult to cope. When this happens, new car owners may be inclined to think that their car is just a bad investment.

While buying a car is likely one of your most significant expenditures, there are many ways to cut back on costs without compromising your ownership or affecting the condition of your vehicle.

To help you forecast and manage your expenditures, here’s a list of expenses for cars you’ll need to cover every year.

The Cost of Buying a Car in the Philippines

Before we factor in all the recurring costs, let’s start with a one-off expense―the down payment.

For illustrative purposes, we’ll use the Toyota Vios 1.3 Base M/T as our reference car throughout the article.

The Toyota model costs ₱706,000,^[1] and the down payment starts at 20%. This means you’ll need to pay ₱141,200 upfront, which is already a significant amount. But remember that more expenses will come in once you drive the car out of the dealership.

What are the Other Major Expenses for Cars I Should Plan for?

Computing the cost of owning a car may be strenuous, but it’s not rocket science. So take the time to do it. After all, it will help you plan your expenses and save more money in the long run.

Check out this car expenses list for everything you need to take into account.

💸 Monthly Auto Loan Amortization

You’ve paid the 20% down on your brand-new Toyota Vios. Let’s assume you’ve also agreed to the 60-month amortization agreement. This means you’ll need to pay ₱12,834 every month for five years.^[2]

Of course, the monthly amortization may still change due to the following factors:

The bank and car loan package that you pick
The dealership promo that you choose to avail
The amount of your down payment

Average total annual cost of car loan amortization: ₱12,834 x 12 months = ₱154,000

💸 LTO Car Registration Fees

Before you can drive around, you need to register your vehicle with the Land Transportation Office (LTO). The renewal of your car’s registration is also required every year. While it doesn’t cost that much, it will still take up some space in your budget.

Average total annual cost of car registration: ₱650 (CPTL) + ₱450 (Emission Testing) + ₱1,600 (Car Registration) = ₱2,960

💸 Fuel

Fuel will always be one of the most significant expenses for cars. This will depend on how often you drive. If you cover large distances regularly, expect to pay more.

Average total annual cost of fuel: ₱57 per liter x 42 liters (full tank) x 24 weeks (assuming you gas up to full tank every two weeks) = ₱57,456

💸 Parking Fees

Parking in Metro Manila is a headache. But if you’re lucky enough, you’ll get a parking spot as one of your employee perks.

Otherwise, you’ll need to park in designated areas and malls, which can be expensive. For instance, the average cost of parking in Makati is around ₱170 for 8 hours.^[3]

Average total annual cost of parking: ₱170 x 20 working days x 12 months = ₱40,800

💸 Car Insurance Premium

If you want to protect not just your car but also yourself and your passengers, you should get a comprehensive insurance policy. You can save big on this aspect if you avail of a promo. Some car brands may offer a complimentary one-year comprehensive insurance policy when you buy a specific car model.

Compare car insurance providers here on Moneymax to get the lowest rate with the coverage you need.

Average total annual cost of car insurance: ₱14,000 to ₱23,000 (for a Toyota Vios 1.3 Base M/T)

💸 Toll Fees

Say you’re living in the South. To get to Manila, you’ll need to drive through the South Luzon Expressway (SLEX). Of course, you’ll need to pay toll fees, which can get pricey.

Average total annual cost of toll fees: ₱442 (Laguna to Makati and vice versa) x 20 working days x 12 months = ₱106,080

💸 Car Repairs

Repair costs will depend on the type of car you own, the kind of job to be done, and the repair shop you go to. However, you may avoid intensive and costly repairs if you’re a careful driver and regularly maintain your car.

Average total annual cost of car repairs: ₱7,000 x 2 times a year = ₱14,000

💸 Preventive Maintenance Service

Never miss your preventive maintenance schedule, as it can help your car last longer and become more cost-efficient. Most Toyota dealers offer free PMS for the first 1,000 and 5,000 kilometers, which usually cost ₱1,500 each.

For 10,000 and 20,000 kilometers, you’ll need to shell out around ₱3,600 to ₱5,700. In short, you’ll spend an estimated ₱12,300 per year (you’ll pay more if you hit 25,000 kilometers and over).

Average total annual cost of PMS: ₱12,300

💸 Car Wash/Auto Detailing

You don’t want to drive a filthy car! Make sure it smells good and looks clean and shiny.

Some owners find it therapeutic to give their cars a good washing down. Others don’t have time to do so and prefer to let the car wash pros do it for a fee.

If you opt for the latter, a basic car wash will cost an average of ₱200, while one with full interior/exterior detailing will cost an average of ₱3,500.

Average total annual cost of car wash and detailing: ₱3,500 x 12 = ₱42,000

💸 Car Modifications

Some owners want to give their car a new look or slight enhancement to make it uniquely theirs. It’s an optional expense when talking about the costs to own a car.

Want to know how much it costs to revamp your vehicle? It depends on the car modification. For example, new seat covers for added style and comfort can cost ₱6,000 or more.

Although you don’t need to replace your tires yearly, you must change them every four or five years. Meanwhile, some car owners switch to performance tires for aesthetic purposes or an improved driving experience. On average, a tire costs around ₱6,000.

Average total annual cost of car mods: ₱32,000

Note: For fuel, toll, and parking, the costs are based on daily trips to the metro. Of course, you can reduce or even remove these expenses if you’re working from home and not driving frequently.

How Should I Calculate My Annual Car Expenses?

Now that you’ve reached this point in the article, you must know how to estimate your car’s annual expenses.

You can use this template to know the actual cost to own a car per year. The computation below is based on the figures discussed in the previous sections.

Expenses	Price
Auto loan amortization	₱154,008
LTO registration fees	₱2,960
Car insurance premium	₱23,000
Fuel	₱57,456
Parking fees	₱40,800
Toll fees	₱106,080
Car repair	₱14,000
Preventive Maintenance Service	₱12,300
Car wash/auto detailing	₱42,000
Car modifications	₱32,000
Total annual car expenses	₱484,604

Note: These are just ballpark figures. You can remove toll fees and parking if you live in the metro or have a parking spot at work. In such a case, your annual car expenses will be ₱337,724.

5 Ways to Save on Car Expenses

The reality of car ownership can be surprising, and adjusting your budget to accommodate new expenses can be challenging. However, there are ways to curb vehicle expenses. Here are some of them:

✔️ Buy the Right Car

It all starts with the choice of your car. More often than not, the more expensive the vehicle, the more difficult it is to maintain. The same applies to large cars and utility vehicles.

When buying a new car, consider smaller models. They’re cheaper, lighter, and easier to take care of. Moreover, their insurance is often more affordable.

But the golden rule here is to pick the car that suits your lifestyle. You don’t have to buy a hatchback if you have a family of seven. Likewise, you don’t need to buy a luxury sedan if you know the monthly amortization will significantly affect your family’s budget.

✔️ Pay a Bigger Down Payment

With a bigger down payment, you can reduce your monthly payment significantly. You can also go for a shorter car mortgage term to shorten the period of interest payment. In turn, you’ll be able to save money.

✔️ Get a Fuel-Efficient Car

As you can see in the table of expenses above, you can spend over ₱57,000 per year on fuel alone. But you won’t always have to go to the gas station if your car consumes less fuel. Also, fuel-efficient cars are environmentally friendly.

✔️ Make Sure That Your Car is Properly Maintained

Don’t skip repairs, tune-ups, and routine maintenance procedures. The goal here is to extend the life of your car’s engine. Your car is at risk for serious damage if you don’t address problems early on. And when that happens, you’ll find yourself shelling out more money.

✔️ Pick the Right Insurance Coverage

Yes, a comprehensive insurance policy is a must-have. But that doesn’t mean you have to avail of every coverage you’re offered. Go for the essential options, such as acts of nature and roadside assistance.

And if you want to save on insurance, try to find a reputable provider that offers discounts on comprehensive car insurance policies.

✔️ Drive Less Often

You may think that driving less defeats the purpose of getting a car. But you must understand that a car is not a tool you should use even if you don’t need to. So if you’re going to the local store within walking distance, just walk or ride your bike.

✔️ Drive Responsibly

If you have a good driving history, there’s a chance that you’ll be offered lower insurance premiums. More importantly, responsible driving will keep you from getting into accidents and similar road issues that require money.

Final Thoughts

A car makes life more convenient. However, the average cost of owning a car per month in the Philippines is a significant amount. Nevertheless, you can always find ways to save on these expenses for cars.

Ask your friends who are already seasoned drivers and long-time car owners for tips. If you want to learn more about saving money and being practical regarding car ownership, check out our other articles!

Here's another tip to save on vehicle expenses: use a credit card made for motorists to enjoy cashback or rewards points with all your fuel or car-related spending. Check out the best options below and apply easily through Moneymax!

Credit Card	Features and Benefits
HSBC Gold Visa Cash Back	3% cash back on fuel spend 6% rebate on first Caltex fuel spend and 3% rebate year-round 5% cash back on dining transactions 0.50% cash back on all other purchases
HSBC Red Mastercard	6% rebate on first Caltex fuel spend and 3% rebate year-round 1 bonus point for every ₱20 spend 4x bonus points on online, shopping, dining, and overseas transactions
Security Bank Complete Cashback Mastercard	4% cashback on gas purchases 5% grocery rebate, 3% utility rebate, 2% dining rebate, and 1% shopping rebate Up to ₱12,000 cashback per year
Petron-BPI Mastercard	3% fuel rebate at Petron Free ₱200 fuel voucher welcome gift
RCBC Flex Visa Gold	2x rewards points in your three preferred categories, including gas Rewards points for all your other spending Free Purchase Protection, travel insurance coverage, and airport lounge access

Sources:

Convenience Isn’t Cheap: The Cost of Owning a Car in the Philippines

Venus Zoleta

The Cost of Buying a Car in the Philippines