Min-ticle #4 - Is buying a car worth it?

To answer this question, let’s have a look at the monthly cost of using a car.

Take a look at this spreadsheet: [Blue boxes are inputs and yellow boxes are outputs.]

I’d like to preface this article by saying that a lot of these numbers are over-estimates. - When it comes to calculating costs it’s better to overestimate than undere-estimate.

The car

Spending £4,000 on anything is a huge commitment. But in the UK, that’s a decent price to pay for a younger car - Maybe 5 to 10 years old. (My other option would be to buy an old rust-bucket and spend more money on repairs than it’s worth!)

Road Tax and Other Costs

Road-tax is usually 20 or 30 at most for most cars like this. 1300 for insurance is an average for 17-22 year olds in the UK.

We’ll come back to fuel later but other expenses include repairs, MOT, servicing and other accessories the car might need. 500 is a lot but again we’re over-estimating here. With something as big and complicated as a car we’re going to need that cushion for something going very very wrong.

Fuel

Okay, now fuel. The average mpg across the UK is 36 mpg for the more common petrol vehicles. Price of petrol per litre right now is £1.40, we shall go up to £1.60 to account for future rising in price.

Let’s say I visit the parents twice a month from where I live. That makes 400 miles. Let’s add on 100 for other journeys. That makes 500 miles.

It could cost me £1,212 a year to fuel this car.

Total Costs

If I owned this car for 5 years, it would cost me £320 a month.

If we were optimistic:

Let’s say the car is £3,000, I found a good deal on insurance (800), I had higher mpg (40) and I travelled less (300 miles).

That would cost me £215 a month.

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So around the range I am working with here is about £200 to £350 per month.

Alternatives

Is public transport so bad? It’s definitely less to think about and that’s a huge tick for me! If I took the most expensive way home, I can get a return ticket for around 50 max each time. If I visit the parents twice a month. That’s 100. Let's say another 100 for other travel during that month. That's 200. Even this gross over-estimate could easily be justified. Right now, I spend on average a sum easily less than 200 a month on travel, and that includes the food, accommodation and events I pay for!

BUT a car can hold many people, it can hold cargo, I could go wherever I want, at any time. It’s certainly a romantic idea to have such freedom in travel and not only that, you can take the people you care about with you! Is that a luxury that I can’t afford right now?

The answer for me right now is a no.

I don’t travel much and not in a way that necessitates a car. If I really need it, hiring a car makes more sense. However, things will change in the future. When I graduate from university, I aim to earn a decent living, and having a car would certainly make things a little nicer.