Insights
Insights for smarter expense management
Practical tips, user stories, and financial strategies that help you track expenses, organize your finances, and make better spending decisions.
Insights
Practical tips, user stories, and financial strategies that help you track expenses, organize your finances, and make better spending decisions.
Buying a car is one of the biggest financial decisions most households make. And yet, people usually judge affordability by one thing: the monthly payment. If it's “only €399 a month,” it feels manageable. But monthly payments hide the real cost of financing. When you look deeper—interest, insurance, fees, depreciation—the car becomes far more expensive than its sticker price.
Let’s break down a realistic example of financing a €25,000 car and what you actually end up paying.
Assume a typical scenario:
Your monthly payment becomes roughly €386 per month.
Over five years, you will pay:
Total repaid to the bank: €23,200
Already, the “€25,000 car” is costing you €28,200 (down payment + loan payments).
Once the car is financed, the bank requires full insurance coverage:
Over five years, these add up to:
Total added cost: ~€7,300
Your car is now costing €35,500+ over five years.
Even a new car needs regular service:
A realistic 5-year estimate: €2,000–€3,000
Let’s take the midpoint: €2,500
Now your total cost becomes €38,000.
Assume:
In 5 years:
Let’s use the fuel example.
Now you're at ≈ €42,800.
This is the biggest cost most people never see.
Cars typically lose:
A €25,000 car after 5 years:
That means €13,000 lost purely in depreciation.
Add this to your previous total:
≈ €55,800**
More than double the amount financed.
People often say:
“I can afford the monthly payment.”
But the monthly instalment is only one part of the financial reality. When you factor in interest, insurance, taxes, maintenance, and depreciation, you understand why cars are one of the biggest wealth killers for households.
A €25,000 car rarely costs €25,000.
With financing, ownership costs, and depreciation, the real 5-year cost can exceed €50,000.
Understanding the total cost—not just the monthly payment—helps families avoid debt traps, choose smarter financing, and avoid being surprised by expenses that were predictable all along.
Understanding how installment plans influence your credit score can help you avoid hidden pitfalls and build a stronger financial foundation.
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