Going on a road trip - in your own car!

ABS-CBN News

Posted at Mar 31 2015 11:16 AM | Updated as of Apr 01 2015 06:11 PM

MANILA, Philippines - Summer is here, and it’s a great time to take to the open road by your lonesome or with friends and family. Even better if you are doing so behind the wheel of your own car.

Having your own car is one of the most liberating experiences you can ever have. Not only would you have the freedom to go wherever and whenever you wish, but owning a set of wheels can also act as a milestone to remind you that you’ve made it!

However, it also entails a lot of expenses. While downpayments for cars are at an all-time low, that does not mean that these monthly installments are the only things you should factor in when planning to buy a car. It doesn’t matter what model you own — be it a gleaming new sports car or a twelve-year-old truck — car ownership will always come with attendant costs.

When planned and managed, these costs should not be a source of stress but rather treated as a premium built into your regular budget.

Whether you already own a car, or are planning to get one, it pays to have a list of your upcoming car-related expenses to help you manage your cash flow properly.

Here are some of the most important expenses that you have to be ready for when you have a car:

Amortization.

If you bought your car via an installment plan, this will be one of your major recurring expenses. Since your monthly payments are going to be fixed over a specific period of time, this will be easiest to track. In case you expect a bonus anytime soon, find out if you also have room to pay more when cash is available, and possibly cut back on interest payment.

Oil and fuel.

Estimate your oil and gas consumption within a given period — say a month — allowing for a small variation in consumption based on changing oil prices and your distance travelled. This will most likely stay at a constant range, except for those times when you go on occasional long-distance drives. This may also be a good time to get a credit card that offers relevant perks: rebate on fuel purchases, discount on auto insurance, membership to auto clubs, and more.

Air conditioning.

This should not be an issue for brand new vehicles, but for second-hand ones, do set aside a few thousands for annual air conditioning upkeep. Being in a tropical country, the air-con is one of the most used features of a car, and one of the things you simply cannot do without for a long period.

Insurance costs.

These will vary depending on many factors, such as the age of your vehicle, model, and amount of coverage. This is typically paid annually. It is best to treat this expense as a necessity, as it protects you from many unforeseen expenses in the event of accidents and theft.

Registration expenses.

For new cars, after the first three years, this becomes an annual expense as with all other cars, and the cost varies depending on the size of your vehicle. Some car dealers throw this in for free with brand new cars, but after that period, you will have to include this expense into your yearly budget.

Tires.

Invest a few bucks in a tire gauge and check your tire pressure regularly (including the often-overlooked spare!). This helps to improve fuel efficiency, cut down on tire wear and tear and lets you know if your vehicle is correctly aligned.

Depreciation.

Although you don’t shell out money for it, depreciation is the largest cost that you will incur. On average, it is estimated to account for about 48 percent of total ownership costs over five years. Depreciation refers to a vehicle's loss in value over a defined period. Most estimates peg the depreciation of an average model at about 65 percent over five years. Some vehicles depreciate faster than others.

Car tune-up and maintenance.

Do not try to scrimp on car maintenance costs, as this is essential to preventing costly problems, prolongs the life of your car, and allows you to have a good driving experience. Most car dealers have a recommended maintenance schedule. Maintenance costs vary depending on your mileage and the state of your car. A number of costs are covered by the factory warranty during the first few years, but these offerings vary per dealer and per model, so it is best to check what you are entitled to.

Most experienced car owners often say that having a car is just like having another child, and it is a wise comparison. Car-related expenses are not a one-time disbursement, but a long-term commitment that should benefit you all the way. Just remember, if you take good care of your car, your car will also take very good care of you — for many, many years to come.

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Grow Your Money is an editorial partnership between ABS CBN News and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances. Visit www.citibank.com.ph for more information.