I was just telling a friend that having a car is expensive, it’s much better to stick with public transport where possible. Sure there’s some things you simply can’t do without a car, but 99% of the time it’s the way to go. If you do need a car though, how cheaply can you do it?

Let’s get some ground rules and assumptions out of the way:

  • We live in Sydney, where public transport is good if you’re in a good area, and barely acceptable if you’re outside those areas.
  • I’m not a car-buying expert, I’m just a guy with a calculator. This is buying and maintaining a car for ordinary people. No doubt you can do this way better if you’re sharp about it.
  • There are probably some smart long-term strategies you can apply here, again, if you know what you’re doing. I’m not assuming that, because this is for a lay person.
  • A really basic, no-fuss car will be perfectly adequate here. It needs to drive easily, carry some friends sometimes, carry some cargo sometimes, and while it’ll be driven in the city it might make the occasional longer roadtrip.
  • Female driver aged 25-30.

Here’s a 2003 Toyota Echo for $5100. It’s a 4-cylinder 1.5L engine, auto, 145,000 km on the clock, rated at 6.7L per 100km, which is alright. Only downside, it’s in Woollongong.

Stamp duty and paperwork$1853% + $32 paperwork
Fuel$1260/yrSay petrol costs $1.80/L right now,
driving 10000 km/yr at 7L/100km economy
Tyres and other consumables$125/yrAssume a full set plus spare, over 5 years
Dunlop SP Sport LM705 (175/65R14 82H)
Servicing$300/yrwho knows, wild guess
Insurance$750/yrThird Party Property only,
might cost $700-800 depending on insurer,
assume $700 excess
CTP$723/yrDependent on driver
Rego$292/yrKerb weight 915kg ($68 + $224 weight tax)
Total Cost of Ownership over 5yrs$22535That’s $4507 per year averaged
TCO on per-week basis$86.34/wkThere’s ~261 weeks in 5 years

We bought a cheap car but the real killer here is those yearly costs! Fuel is expensive of course, and once you add insurance and rego you’re past 50% of the car’s value in yearly costs.

You could even buy something much nicer for the money, like a Mercedes C200 of similar age, it’s even a smidge cheaper. You’ll definitely pay more in maintenance and running costs though.

  • Fuel: +300/yr probably
  • Tyres: +15/yr
  • Servicing: +1000/yr or more, if you’re looking after it properly
  • Insurance (TPP): Probably no change, different insurer might knock off $100-200/yr
  • Rego: +94/yr because we’re gone up two weight classes

New TCO is $29467 over 5 years, or $113/wk – the purchase price isn’t what’s killing your wallet here. Proper servicing does make a big difference, if you were content to just let it limp along over 5 years, then the price premium is only $8/wk for the Merc.