How much to spend on a car: the price is not the cost
Set a monthly number before you set a windscreen number. Two cars at the same price can cost thousands apart over three years, and none of that difference is visible on the forecourt.
Set a monthly number first
The windscreen price is the number the whole industry organises itself around, and it is the least useful one for working out what you can afford. It is a single payment that happens once. Owning a car is three payments that happen continuously: what it costs to keep on the road, what it loses in value, and whatever you borrowed to get hold of it.
So start from a monthly figure you can pay without noticing, and work backwards to a price. Doing it the other way round — picking the car and then discovering what it costs — is how people end up with a car they cannot afford to use, which is a specific and miserable kind of expensive.
The three costs, and their sizes
In this catalogue the three costs have very different sizes, and it is worth knowing which one deserves your attention.
- Purchase. The European list runs from €16,500 to €85,000, with a median of €34,000. This is the number everybody compares, and the only one entirely under your control.
- Running. Between €72 and €265 a month, median €195 — this project's estimate of what it takes to keep each car on the road. Over three years that is €2,592 at one end against €9,540 at the other, a gap of nearly €7,000. What a car costs to run breaks the figure down.
- Depreciation. Between 8% and 19% a year. On a €34,000 car held for three years, that is a loss of about €7,500 at the low end and about €15,900 at the high end — and it is the cost nobody puts in a spreadsheet.
What each band buys
| Budget | What it buys | What it does not |
|---|---|---|
| Under €20,000 | The list starts at €16,500 for petrol and €18,900 for electric. Small, light, short on range. | Space, long range, towing weight. |
| €20,000–35,000 | Where most of the list lives. Hybrids open at €21,000, plug-in hybrids at €28,000, and the median car is €34,000. | The longest ranges and the heaviest towing figures. |
| €35,000–55,000 | Size, range and capability. Petrol tops out at €48,000 here, and diesel does not start below €38,000. | Very little a household actually needs. |
| Over €55,000 | Power, finish and badge. The list ends at €85,000 and 378 hp. | Nothing. From here up you are buying want, not need. |
Note where the middle of the list sits. Half of it is under €34,000, and inside that half the median boot is 451 litres, the median car seats five and the median range is 880 km. In other words, the middle of the market already does what most households ask of a car. Give the finder a ceiling and it will show you what that money reaches across all 101 of them.
Working out the number that binds
Start from the monthly figure
The amount you can pay every month for three or four years without thinking about it. Not the maximum you could pay in a good month. The comfortable one.
Take off the running cost
Use €195 a month as a placeholder — the median for this catalogue — or the honest bounds of €72 to €265 if you want to see how much it moves. This is the money the car takes simply to stay usable.
Decide whether depreciation is a bill or a surprise
If you finance the car, depreciation is already inside the monthly payment — that is largely what the payment is. If you buy outright it is not a monthly bill at all: it is money that quietly leaves the car and shows up as a smaller number when you sell. Either way it is real, and at the catalogue median of 13% a year it is about €368 a month on a €34,000 car.
Add the once-a-year items
Insurance, whatever tax applies where you live, a service, and tyres every few years. These vary far too much by country, age and driver for any guide to put a number on, so get real quotes for the two or three cars on your shortlist before you choose between them. The quotes can differ by more than the cars do.
What is left is the purchase budget
Set it as a hard ceiling and give the finder that number. A ceiling set before you look is a ceiling you keep; a ceiling set after you have seen the car you want is a negotiation you lose.
The cost nobody budgets for
Depreciation is usually the largest cost of owning a newish car, and the only one that stays invisible until the day you sell. In this catalogue the annual rate runs from 8% to 19%, with a median of 13% — a spread wide enough to matter more than the fuel choice does.
The arithmetic compounds, which is what makes it bite. A €34,000 car losing 13% a year is worth about €22,400 after three years. The same car at 19% is worth about €18,100; at 8% it is worth about €26,500. Same money in, €8,400 apart on the way out, for a difference you could have predicted before you bought.
What drives the rate is demand for the car second-hand, and that is largely foreseeable: unusual specifications, body styles that are out of favour and models with thin used demand all fall faster. Depreciation explained sets out what to look for. It is the part of this process with the best return on fifteen minutes of reading.
Where spending more stops buying anything
Past a point, more money stops buying capability. The catalogue's 0–100 km/h times run from 5.0 to 14.9 seconds and its power from 65 hp to 378 hp, and nothing about a commute distinguishes those ends. Range tops out at 1,200 km, which is more than anyone drives in a day. Boot volume tops out at 1,844 litres, which is a van doing a van's job.
What the top of the market does buy, reliably, is quiet, material quality and the assistance that makes a long day less tiring. Those are real, and they are worth money to some people. This project scores comfort and technology 0–100 by judgement rather than measurement — comfort runs 44 to 88, technology 34 to 92 — so use the scores to sort a shortlist rather than to justify a number.
The practical test: name what the extra €15,000 buys, in one sentence, before you spend it. If the sentence is "it is nicer", that is a legitimate answer — but it is a comfort purchase rather than a capability one, and it should compete with everything else €15,000 could do. How to choose a car starts from the capability side, and petrol, hybrid or electric is usually a bigger lever on the monthly figure than any trim level.
Questions readers ask
- What share of my income should a car be?
- There is no honest universal figure, and the percentages people quote are rules of thumb rather than findings. A more useful test is this: could you absorb the monthly running cost and one unexpected repair in the same month without borrowing? If not, the car is too expensive whatever share of your income it represents.
- Is it cheaper to buy outright or on finance?
- Outright is cheaper in total, because finance charges interest. That does not make finance wrong — it spreads a cost you would otherwise have to have saved, and it often moves the depreciation risk onto someone else. Compare the total amount payable, including the deposit and any final payment, rather than the monthly figure.
- Should I spend my whole budget?
- No. Leave something back for the first year: tyres, a service, an insurance excess, and whatever the previous owner did not mention. A car bought at the absolute ceiling is a car you cannot afford to fix, and that is how a good purchase turns into a bad one.
- Does a cheaper car cost less to run?
- Not reliably. The cheapest car in this catalogue, at €16,500, has a running cost of €195 a month — exactly the median across all 101 cars — while the lowest running cost here is €72 a month on a car costing €18,900. Purchase price and running cost are two different rankings and they have to be checked separately.