Car Ownership: What first-time car buyers need to know

Read this before buying a car

So you've finally decided you're going to buy a car. Congratulations!

You're probably doing a variety of car dealer visits, browsing the second-hand classifieds, doing a series of test drives, and watching reviews on (shameless plug) the AutoIndustriya YouTube channel. That's really the fun part of getting a car: the shopping part.

There is something we need to tell the many aspiring first car owners though: it is not cheap.

We're not talking about cash payments, insurance costs, amortizations, or down-payments; your sales agent has computed all of that already. We're talking about the costs that you'll only learn about when you actually start the ownership experience.

1. Maintenance isn't cheap

Periodic Maintenance Service (PMS) is something that you should seriously research before signing that paperwork. Think of it this way: treat a sales form or loan agreement like a marriage contract. That means you are going to be in a relationship with that brand and your dealer for quite a while.

Do your due diligence before signing and ask questions about maintenance. You probably won't get the answer from the sales agent, so that means you should head on over to the service area and talk to a service advisor. The first check-up (either 1,000 or 5,000 km) is usually free, so ask him/her how much the first PMS costs; that's usually at 10,000 km. Ask about your service intervals because that determines how often you'll have to visit the dealer for a check, and then ask how much those would cost and what parts are typically replaced.

Honestly, I place greater importance on how much a car costs to maintain with the dealership (under the warranty period) rather than the concept of resale value. I mean if you're going to spend 2x or 3x as much maintaining a car from Brand X versus Brand Y, is that resale actually worth it? Some even have free PMS factored in as well.

2. Insurance is not totally cost-free

If it's your first time buying a car, then one thing you may not have been briefed on is how car insurance works; particularly something called a participation fee.

When you get into an accident and use your insurance at the dealership, you have to pay a small fee (a “participation”) for the ball to get rolling on the repair. It may surprise some that they still have to pay if they try to make a claim. Car insurance isn't an HMO.

The participation fee may vary, but generally, it is comprised of two things: the deductible fee (usually around 0.5 or 1.0% of the fair market value of the car) and the depreciation fee. These fees can be computed based on your car's insurance policy so make sure to read the fine print on how that is done.

These fees often discourage owners from making claims on small things like a minor fender bender or a few scratches because the participation fee can exceed having it repaired or buffed out. If it's a more major repair (e.g. smashed door, replacing panels, replacing wheels, etc.) then the participation fee becomes worth it.

3. Painful fuel costs

Now more than ever, fuel is not cheap.

As a first-time car buyer, you have to compute and factor in fuel costs for your daily drive, and whatever else you want to do on weekends. And you can only get a ballpark figure of that once you actually own the car and start driving every day.

Unfortunately despite all our testing of all the cars in the market, our numbers will not be 100% applicable to your situation. There will be variations based on where you live (rush hour traffic conditions), how much fuel is in your area (not all are priced equally), and how you drive.

Don't compute based on costs just yet; compute based on liters. My ballpark figure for my daily routine to and from the office using a pick-up truck with a 2.5L diesel and 7-speed automatic is about 20 liters a week. A year ago that would have been about PHP 900 per week. Now it's more like PHP 1600. Thanks for the war, Vova.

4. Parking ain't free

If you have the privilege of free parking provided either by your office's location or by your company, then you're lucky. But for us average folk who bought a car and have to go to an office in a central business district (CBD) every day without the benefit of parking provided, then that is going to be an issue. And an expensive one.

Car parks in CBDs typically charge anywhere between PHP 40 to 60 for the first two hours, then PHP 20 or 30 for every hour after that. So let's say you typically arrive at the car park at 7:00 AM and leave at around 5:00 PM, you'll end up paying anywhere between PHP 200 to 300 for a full working day. Unless your rank entitles you to some kind of subsidy or reimbursement, that will likely be unsustainable.

Depending on where your home is, you could also be paying for parking; think condos or apartment blocks. When you go to a mall or any establishment, you'll also likely pay for parking or at the very least pay a parking attendant; most likely they will be the unofficial kind. The only “free” parking is on the street, but try doing that at the wrong place and you might find yourself paying for towing and impound fees.

5. The temptation to accessorize

Car owners love to personalize their vehicles. That's natural, but do keep in mind that the costs of such accessories do build up considerably.

If you want new wheels, a set can cost anywhere between PHP 20,000 to well over 100,000 depending on where and who made it. If you want better car mats (like those vehicle-specific deep dish mats) then expect to pay about PHP 3000 to 5000. If you want to use a car freshener, those are usually PHP 200-300 and last about a month. If -heaven forbid- you want to go nuts on the chrome or fake carbon fiber and add all kinds of "abubot" on your car, you can.

Let me tell you now that the costs do add up; costs that could go to more meaningful upgrades like a hydraulic jack or more money towards maintenance or fuel. The problem now is the temptation is much more difficult to resist now that e-commerce sites like Lazada and Shopee exist. Before, you had to go to a Blade or (if you're more Tito) to a Concorde. Now the temptation is literally at your fingertips and with free shipping whenever the month and date are the same.

6. Tires and batteries are not forever

By far the most painful thing to replace on any vehicle are the tires and the batteries.

No, they do not last the life of the car. Actually, I'd be surprised if all the stock tires on a daily driven new car will last 3 years. The reason is because of all the potholes, construction work, and debris on our roads that will destroy a tire.

I've experienced a tire puncture due to a bolt, a screw, a nail, an Allen bolt key, and even a house key punching a hole through my tires. That last one happened whilst on the C-5 Pasig flyover, resulting in lots of traffic and honking. It was the quickest tire change I've ever performed; about 5 minutes thanks to a hydraulic crocodile jack and a cross wrench.

If you're replacing the tires on a typical sedan, a ballpark figure is about PHP 4,000 or 5,000; mind you, that's per piece. Premium names will cost more too. If you're replacing low-profile tires, expect to pay more too. SUV tires are by far some of the most expensive; even more so if you're looking at more specialized rubber like all-terrain tires.

As for the batteries, the cost depends on your vehicle. The original factory batteries typically last anywhere between 18 to 36 months, and they are not cheap to replace once the time comes. 

7. Carwash + Upkeep costs

I'll put this out there: we Filipinos are very anal-retentive about automotive cleanliness.

It may be a fallacy because I have no numbers to support that statement. But of all the places I've traveled to, driven at, and observed the automotive habits in, I have a strong feeling we have more carwashes per capita or per square kilometer than anywhere else in the world. I'm willing to bet that generally speaking, our cars are some of the cleanest in the world.

We're obsessed with car cleanliness, which is why even during the water crisis in the summer of 2019 in Greater Metro Manila, car owners were still getting their cars washed. So factor in the cost of getting your car cleaned. I know of people who have their cars washed every week, every 3 days, or even every other day. Also factor in the need to have it waxed, polished, buff out scratches or detailed. That will all depend on your personal preferences.

8. Registration costs

If you bought a car brand new, then you won't have to worry for 3 years because the registration is already factored in there. But if you bought a second-hand car, then you do have to worry about that.

Inspection costs, registration costs, TPL insurance, MVUC, and all these other fees will have to be paid yearly. That's just part and parcel of car ownership, which is why there was a lot of uproar with issues like the PMVIC/MVIS, among other things.

9. Reserve for accidents, violations

Not everything goes as planned, no matter how meticulous you prepared for it. Accidents do happen to even the most careful drivers, and even the most law-abiding motorist sometimes gets caught out by a rule or a traffic sign in an unfamiliar area.

So you should always have some cash in reserve for these eventualities. Insurance covers a lot, but have some money in reserve if you need to use it for an accident or a traffic violation. You don't want to be "kamot-ulo" if you accidentally sideswipe another car where you have to pay for someone else's repair plus your own. And you should be ready to be able to cover basic hospitalization if you bump a pedestrian (or even a jaywalker) on the road.

That just goes with the territory of being a responsible driver. You should not be driving like it's "petsa de peligro" all the time.

This isn't about dissuading you from buying a car. This is all about letting aspiring new car owners know the costs associated with car ownership upfront.

Car ownership represents great freedom, but that comes with great fiscal responsibilities. So long as you know and are prepared to accept that, and more importantly, have the cash to back it up, then you should be fine.