Car Running Cost Lingo Explained

Here in DoneDeal we understand that owning a car in Ireland comes with several running costs that go beyond the purchase price. Understanding these expenses can help car owners budget effectively and avoid financial surprises. Here’s a breakdown of common cost-related terms and how they can impact overall running costs.

Fuel Type

In our opinion the fuel type is one of the primary factors affecting a car’s running costs. Here in Ireland, petrol and diesel have been the dominant fuels for decades, but with the rise of electric vehicles and plug-in hybrids, the landscape is changing. Petrol and diesel prices fluctuate based on global oil prices and government levies, with diesel typically costing less per litre but incurring higher road tax in many cases. Electric vehicles, on the other hand, offer significantly lower running costs per kilometre. Charging at home using night rate electricity can cost as little as €4 to €5 per 100 km, compared to the much higher cost of fuel for traditional engines. Additionally, EV drivers can also benefit from lower Vehicle Registration Tax (VRT) and tax incentives, further reducing overall running costs.

Servicing Costs

Annual servicing costs refer to the expenses incurred for routine maintenance and repairs. For petrol and diesel vehicles, regular servicing typically includes oil changes, brake checks, filter replacements, and timing belt inspections. Diesel vehicles may also require more frequent servicing depending on the mileage due to the build-up of soot in the particulate filter. Electric vehicles have lower servicing costs as they have fewer moving parts and do not require oil changes. However, EV owners should still budget for periodic brake fluid changes, tyres, and battery health checks. Hybrid vehicles tend to fall somewhere in the middle, with both traditional engine maintenance and electric components to service. Understanding these differences can help car owners anticipate their annual servicing expenses more accurately.

Motor Tax

As we know, motor tax is a mandatory expense for all vehicle owners in Ireland and is calculated based on the car’s engine size or carbon dioxide (CO2) emissions, depending on the vehicle’s registration date. For older vehicles registered before 2008, the tax is based on engine size, with higher-capacity engines attracting steeper fees. For newer vehicles, motor tax is calculated based on CO2 emissions, making EVs and hybrids more cost-effective in terms of annual tax. Fully electric vehicles are eligible for a reduced motor tax rate of €120 per annum, while low-emission hybrids also benefit from lower tax bands. Petrol and diesel vehicles with higher emissions can incur motor tax costs of several hundred euros per year.

Insurance Costs

Car insurance is another significant running cost that varies based on several factors, including the vehicle’s value, engine size, driver’s age, and driving history. Petrol and diesel cars with larger engines typically attract higher premiums, while EVs and hybrids may qualify for discounts due to perceived lower risks. Additionally, some insurance providers now offer EV-specific policies that cover battery replacement and damage to charging cables. It’s crucial for car owners to compare policies to ensure comprehensive coverage while minimising costs. Young or inexperienced drivers may also consider telematics or usage-based insurance policies to reduce premiums based on driving behaviour.

Conclusion

Understanding the common running cost terms or lingo associated with car ownership can help drivers make informed financial decisions when purchasing a vehicle on DoneDeal. By evaluating fuel type, servicing expenses, motor tax rates, and insurance premiums, car owners can more accurately budget for the total cost of ownership. With the growing popularity of electric and hybrid vehicles, there are increasing opportunities to reduce these costs, making it essential to stay informed about available incentives etc. Keep an eye on the DoneDeal blog and our YouTube channel for more information.