Owning a car could drive you to distraction

You might well dream of hitting the open road but you're likely to be

Cars often seem more trouble than they're worth. You can't drive them to work because you have no allotted parking space. You can't bring them out at night because you want to do more than just sip your drink.

So what can you do with them, apart from watch them sitting in your driveway gathering dust?

They may be an essential method of transport for families, for people living outside urban areas and for anyone trapped in a public transport black hole, but for young people on an average wage living and working in cities, a car can be an expensive convenience at the best of times and a liability the rest of the time.

For a small car travelling 10,000 miles a year, AIB's online car running costs' calculator estimates that the approximate monthly fuel cost will be €103.67, the approximate wear €97.25 and monthly car tax €21.17.

Motor insurance has been at the forefront of bad press for the insurance industry in recent years and certainly adds significantly to overall motoring costs. For a female, aged 25, who works as an administrator in Dublin and has had a full licence for two years, the best quote received through www.123.ie was for €1,192, available from Hibernian Insurance.

It is worth noting that, due to the higher actuarial risks of accidents, younger men face greater insurance costs than their female counterparts, bumping up their annual motoring bill. Certain occupations will also have a loading on premiums.

But even taking this competitive quote and spreading it over the year, monthly insurance costs amount to €99.33, bringing the running costs estimate for a small car to a total of €321.42 a month or a massive €3,857 a year.

This is before you take into account the capital spent to get your hands on your very own steering wheel in the first place.

Good value may be on offer in the older reaches of the second-hand market, but otherwise first-time buyers are looking at laying out a substantial sum in their quest to avoid public transport.

If you don't have the cash upfront, there is the cost of credit to consider.

Bank of Ireland says its average car loan is €9,000 with repayments spread over three years. Its current variable annual percentage rate of interest (APR) on motor loans at this level is 8.5 per cent.

This means monthly repayments of €283, without payment protection. The total cost of the credit will be €1,182.

AIB describes a typical car loan as €15,000 over a term of four years. For a loan of this size, the variable APR is 8.24 per cent. Monthly repayments are €363.75 over four years.

The cost of the credit on top of the original €15,000 loan is €2,460.

To obtain a car loan, consumers will have to have a credit rating that doesn't smell of unpaid credit card bills and unauthorised dips into the red.

Even consumers with a glowing credit record will still be able to borrow only what the lender deems is within their repayment capacity.

If they don't qualify or they can't get enough to buy the car they want, consumers face complex finance arrangements such as hire purchase, leasing and personal contract purchase (PCP).

These can be collectively known as "forecourt finance" - special offers sold by the garage on behalf of a finance company and often linked to a particular make or model of car.

Under a standard lease, no deposit is required and monthly fees are determined by the value of the vehicle, its projected depreciation and interest rates. This solves the problem of having to raise capital upfront, but significant costs are incurred if the car exceeds mileage limits or suffers undue wear and tear.

Under PCP and hire purchase, payments are usually fixed and low, but ownership of the car does not pass to the driver until the last "balloon" payment is made.

Because repayments are structured this way, drivers can end up in a negative equity situation, where they owe more on their car than it is actually worth.

Consumers who enter into a PCP with the intention of eventually handing the car back can avoid being charged a balloon payment at the end of the three-year or five-year period and simply move onto a new model.

But for consumers who want to actually own their car, forecourt finance is often more expensive than straightforward car loans from mainstream lenders.

So, at what point does owning your own car become more trouble than it's worth? For young drivers who come through the pain of driving lessons, theory tests and three-point turns with a full licence, owning their own car signifies freedom.

But if you're at least 23 years' old, there is another option - hiring. "With parking, congestion and insurance difficulties, the trend is for people to rent cars at the weekend and take public transport during the week," says Mr Greg Turley, managing director of Argus Rentals. Rates are competitive and cars are readily available, he says.

"Hiring really comes into its own with the flexibility it gives. People have the car when they need it. With leasing and purchasing, you're stuck with it," he adds. "Leasing and purchasing amount to the same thing: you have responsibility for the car for the full period."

Mr Edo de Jongh, sales and marketing director of Murrays Europcar, agrees that hiring can often prove flexible. "For people who work five days a week and don't need a car to travel to and from work, the car is costing them money almost 80 per cent of the week," he says.

"Okay, the daily cost of hire might be a little higher, but when there are so many days of the year when you are not using the car, in the end it works out cheaper," Mr de Jongh continues. "If you live in certain areas, you almost can't afford to park your car outside your own house."

Still, the ownership mentality is quite strong in the Republic compared to our European neighbours, according to rental agencies.

Ireland is still dominated by the two-car family, where convenience is the main priority, according to Mr Dermot Carberry, sales and marketing director of Avis Rent a Car.

But for people just making the occasional trip, it makes sense to hire a car, he believes.

"Why wouldn't you rent a car if you were going from Dublin to Donegal or Dublin to Galway?"

The price of car hire doesn't usually include the price of a full tank of petrol, but even when you take the fuel cost out of the equation, the cost of owning your own car is still a significant €2,613 a year, according to AIB's estimates.

According to the survey of car rental costs above, this equals to around 24, three-day weekend rentals in off-peak times or 19 bank holiday weekend trips.

It's a motorist's dream to drive along the open road in a 03-plate, scratch-free car with the sunroof open and the stereo on, give or take a miniature toy dog nodding contentedly in the back window.

Just don't mention road rage, insurance premiums, parking spaces almost as far from the office as your own house or the fast-expiring tax disc peeling off the front window.