Want to buy a car? Here's a complete list of all associated costs

Owning a car is a joy in itself and surely an achievement too. Just imagine a small kid who loves tagging along with his dad every time he goes out to the office or does some work in the car. The happiness that those small car rides brought is better than anything else in the world for that child. As this child grows up, his love for cars extends to car toys, car movies, and those fancy cars zooming around on the road. Slowly, he begins to create his own wish list, which also includes buying a specific car one day. Everything in this story is going fine until the child becomes an adult and the harsh reality of life hits.

Sorry, we don’t want to sound negative, but for most of us, it is the way of life. Anyways, when the time finally comes to buy a car, only a handful of people are able to afford their dream car in the first go. Otherwise, for most, it is a budget-friendly, reliable car that is trusted by many. Whatever might be the case, what remains common is the fact that most of the time, the buyer is unaware of the expenses associated with buying a car.

Buying a car doesn't only mean paying the asking price and taking the car out for a ride. It may be the case in a movie, but in the real world, things operate quite differently. Apart from sorting out car financing options (car loan or personal loan), calculating monthly payments, and handling the down payment, there are quite a few matters that need to be worked upon, for instance:

• Registration
• Insurance (Compulsory Third Party Liability (CTPL) Insurance &
• Comprehensive Car Insurance)
• Fueling
• Service & Repair

Let us now discuss each of the above pointers in detail, starting with car registration.

Registration

Being a car owner is a good thing, but it comes with its own set of responsibilities, most of which require careful attention and money. One important responsibility is registering your car at the Land Transportation Office (LTO) and acquiring OR/CR (LTO Official Receipt and Certificate of Registration).

The LTO OR/CR are documents of utmost importance. They not only are proof of the vehicle’s registration via legal means but also serve as a unique ID. If you wish to understand OR/CR in detail, click here.

Also Read: LTO OR/CR: Get to know the two of the most important docs for your car

Here are some of the benefits of motor vehicle registration:

• Helps LTO and other authorities track the vehicle and trace it to the owner
• Ensures the vehicle is roadworthy
• Traces the vehicle back to the owner in case of an accident or theft
• Helps minimize road accidents caused by poor vehicle quality
• Helps the owner avoid illegal car ownership
• Comes in handy at the time of renewal as it ensures the car is in a good state and safe to drive

Coming to the cost and fees related to car registration, the price you’ll pay for the first time varies depending on several factors. However, to give a general idea, it would be somewhere around PHP 1,000. In addition to car registration, there are a few fees a car owner needs to pay, including the price of license plates, vehicle tags, stickers, and inspection.

• License plate: PHP 450
• Stickers & tags: PHP 50
• Inspection fees: PHP 90 to PHP 115
• Penalty (if you fail to show up on the given schedule for car registration): PHP 50

There are a few important things to note when it comes to registering your car, which we’d like to share with you. The list includes:

• Not all LTO branches do new car registration, therefore it is always better to first check with the branch.
• Always inquire about the requirements that must be fulfilled for the application to be accepted by the branch, as some LTOs have different requirements.
• If you are a first-time car owner, your registration will be handled by the motor vehicle dealer.
• Factors like the type of vehicle and time period without registration affect the fees a car owner is required to pay for failing to register the MV properly.

For complete step-by-step instructions on car registration in the Philippines, check here.

Insurance

Car insurance is nothing but a contract between the car owner and the insurance company, offering financial protection in the event of an accident or theft. While the insurance company pays for your losses, the owner needs to pay an agreed amount as a premium to the company.

Broadly speaking, there are two types of motor vehicle insurance in the Philippines - CTLP and Comprehensive car insurance. Let us now understand each other in detail.

Compulsory Third Party Liability (CTPL)

Any motor vehicle registered with the Land Transportation Office is required (mandatory) to have a Compulsory Third Party Liability (CTPL) insurance policy. In most cases, CTPL comes with the policy and a Confirmation of Cover. The latter serves as proof of third-party insurance coverage acquired before registration, and it protects the general public in case of an accident.

It's to be noted that CTPL (Compulsory Third Party Liability) insurance is distinct from comprehensive car insurance. The latter is a mandatory requirement by LTO for all vehicle registration and registration renewal.

What does CTPL cover?

• Bodily injuries and death for third parties caused by the owner of the insured motor vehicle
• Only covers third-party liabilities, i.e., injuries or death of non-passengers

As it is the most basic and least expensive type of coverage, it doesn’t cover the owner’s bodily injuries or vehicle damage.

Overall, the CTPL, which is a mandatory requirement for LTO registration and renewal, serves multiple purposes, including offering protection to the general public (in case of an accident), giving assurance of an insurance policy in place (in case of an accident), and serving as proof of third-party insurance cover for the MV.

As for CTPL insurance coverage amount, it depends on the vehicle and situation. The table below gives complete details on the subject.

• Private Vehicle: Third-party insurance coverage for the victim - PHP 100,000
• PUV: Third-party insurance coverage for victim - PHP 100,000, Total death benefit for passenger-victim - PHP 100,000
• ‘No-fault’ clause: Third-party victim coverage - PHP 15,000 (without proving negligence)

Coming to the fees, the price for CTPL is a bargain compared to the coverage. Check out the table below and find out how much you’ll need to pay:

• Private, a comprehensive car insurance policy can be customized depending on the vehicle owner's automobiles: PHP 1,000; PHP 3,000 (for three years of coverage)
• Motorbikes: PHP 500; PHP 1000 (maximum reimbursable fees)
  Stay tuned with Carmudi if you want to know more about CTPL’s (step-by-step guide).

Also Read: Compulsory Third-Party Liability Insurance (CTPL) vs. Comprehensive Insurance: What's best for you?

 

Comprehensive Car Insurance

While getting Compulsory Third-Party Insurance is a mandatory requirement by LTO, a car owner should get comprehensive car insurance too, as it’ll save him/her from several unexpected expenses that might occur later on (from accidents to theft and even natural disasters). Unlike CTLPr's budget and requirements.

How much does comprehensive car insurance cost in the Philippines? The range varies from PHP 15,000 to PHP 50,000+ annually, with more protection leading to expensive premiums and minimal coverage, meaning cheaper premiums. However, it is to be noted that several factors affect the cost of comprehensive car insurance, for instance, car type & model, safety features on-board, vehicle condition, credit history of the owner, accessories, driver’s age & profession, and inclusions.

Note there are different types of coverages a vehicle owner must consider when opting for a comprehensive policy. The list includes:

• Own damage and theft
• Acts of God (floods, typhoons, and earthquakes)
• Personal accident cover (covers driver’s and passenger's medical expense)
• Loss of use cover (repairs after an accident)
• Road-side assistance (repair and technical assistance)
• Value-added services (covers towing on-site repair, hotel accommodation charges)

Also Read:Why comprehensive insurance is vital for car owners in the Philippines

Fueling

After considering car registration and insurance (both mandatory and add-on) prices, what a vehicle owner should consider next is the gas expense.

Yes, it is very important for a car owner to take into account this particular expense, as it will be an important part of the monthly budget. Also, how frequently you visit a gas station depends on the car you purchase. For example, a fast sports car with a big engine might seem tempting, but it’ll consume more fuel compared to a small-engine car.

There are several fuel cost calculators available online that will help you check your daily, monthly, and yearly fuel costs.

Service

Be it a new car or a second-hand car, owning a vehicle is a different feeling in itself. However, a car owner needs to shower the four-wheeled friend with some much-needed love in the form of regular maintenance. While it may seem like an added expense at first, in the long run, it’ll save you big bucks, as no damage will go unseen for long, and it will be corrected before it's too late.

There are several benefits associated with routine car maintenance, including:

• Car will not overheat
• Vehicle’s mileage will not drop with time
• Well-maintained cylinder head and spark plugs
• Car’s life will increase
• Car’s performance will remain intact
• Car’s safety specs are regularly checked

As for cost, for the first 1,000 to 5,000 km, preventive maintenance service will cost around PHP 3,600 to PHP 5,700 annually. This cost will go up to PHP 12,300 when the car hits the 25,000 km mark.

In addition to the above-mentioned car ownership costs, there are a few more that we’d like to mention. For instance, there are parking fees, toll fees, car repairs, car wash & detailing, and car modifications. Note that these expenses are based on one’s daily trips to the metro and can even be removed if the owner is not a frequent driver or works from home.

Bottom Line

While a car adds comfort and convenience to your life, it brings along its own set of expenses, which an owner should be aware of and prepared for. However, there’s no need to worry, as there are ways to cut short one’s car expenses (which we’ll discuss with you soon).

Also Read:Check out all the violations, penalties, and fines a driver may face in the Philippines