While the costs of first-time house buyers are constantly discussed, Caroline Maddenwrites that it's time to put first-time car buyers costs in the spotlight.
Last week, the plight of first-time house buyers dominated the headlines as the Budget came and went for another year.
But while the stamp duty argument drones on, spare a thought for first-time buyers of a different kind - young drivers. True, they don't have to mortgage themselves up to the hilt for the next 40 years to get a foot on the motoring ladder, but nevertheless getting on the road comes at a hefty price.
Buying your first car typically coincides with starting your first proper job, when getting a regular - albeit small - pay packet is still a novelty. But then you splash out on a car and suddenly your bank account seems to spring a few leaks. Car loan repayments? You're looking at €300-plus a month. Motor insurance? €150 minimum a month. Petrol? Let's say another €150. A couple of driving lessons? That'll be €70 please. The freedom to go wherever, whenever? Priceless. Or is it?
Knowing that a new set of wiper blades, let alone an NCT or a set of tyres, is likely to tip your bank balance into the red is often the grim reality facing first-time car owners. But if it's so expensive, why bother? Well, for most young drivers I know, having a car is a necessity rather than a luxury.
Take Hannah for example. She's 23 and is commuting to Dublin from Kildare and has just bought her first car - a Volkswagen Lupo. "I have recently moved back to my family home in Kildare to save some money. In order to make my commute more flexible, a car was something I definitely needed," she says. "As yet, it has been okay but I'm considering moving back into town in a few months. So that will probably be tough as I will have to cover rent and loan repayments. Having a car means I will be more limited in terms of where I can rent as I will need a car space - an added expense!"
"The majority of young people in rural areas depend on their cars, whether for travelling to work or for just going about their day-to-day business," says Colm Markey, national president of Macra na Feirme. "While the cost of insurance has been coming down, young drivers still experience real difficulties in securing motor insurance at a reasonable price."
Research carried out by Macra (which represents young people in rural areas) earlier this year showed that the waiting list for driving tests is costing provisional drivers over €23 million each year in higher insurance premiums.
"Clearing the backlog of provisional drivers waiting for a driving test must be a priority and should be addressed without any further delay," says Markey. "In relation to the cost of insurance, it's important to point out that all young drivers are not the same and it is driving history, rather than age, that should determine motor insurance quotes," he adds.
In the run-up to the next year's general election, the National Youth Council of Ireland (NYCI), will be lobbying the Government on the cost of living for young people. The cost of motor insurance will feature as one of their key arguments. "NCYI has never disputed the fact that younger drivers are a greater risk but it is the extent of the extra cost that we dispute," the council says.
While insurance costs for young drivers have dropped since 2002, the NCYI says that this "does not factor in the large price increases between 1990 and 2000 when insurance costs went up by 80 per cent".
During this time the NCYI argued that insurance companies were making their largest profits from young drivers, particularly young male provisional drivers, and it says that this trend still continues. The council is pushing for the introduction of a good driving record rebate for young drivers paying high insurance premiums. The rebate should be funded by the 2 per cent Government levy on non-life insurance policies, and contributions from motor insurance companies, it suggests.
In the meantime, as a young driver, I have to accept that my car insurance premium will be higher than average as I'm part of a high-risk category. Like many young drivers, I also pay several hundred euro a year for private health insurance on top of my motor insurance. However, as a result of a recent High Court ruling on risk equalisation, my health insurance premium will no longer reflect the fact that I represent a very low risk of making a claim.
Risk equalisation underpins the Government's "community rating" policy, which involves younger, lower-risk policyholders subsidising the healthcare premiums of older, higher risk individuals. Clearly, the idea of supporting the elderly as their health begins to fail is laudable. But it seems like a lose-lose situation for the younger generation, who will now get squeezed on the double.
One of the arguments against applying community rating to the motor insurance market is that people don't choose to fall ill, whereas driving is a choice. Try telling that to the young person who lives five miles outside a town with no access to public transport.
It's not all doom and gloom though. Once you get through the first couple of years, the financial burden of keeping a car on the road begins to ease.
A small pay raise here, a no claims bonus there, and before you know it you can afford to fill the tank and eat.
But enjoy the breathing space while you can, because by then it's usually time to start thinking about a mortgage . . .
Four first-timers outline the costs involved in getting them on the road
NAME: DAVID McGOEY
Age: 22
Car: VW Golf 1.4 litre, which David bought when he was 19.
Cost: €5,500 - he paid for this entirely out of savings. He also added extras to the car - alloys (€500), spoilers and eyebrows (€300).
Insurance: David was initially given a quote for €4,000 (he held a full licence at this point), but shopped around and decided to get a tracker device fitted by Axa which reduced his premium to €2,900. This year he paid €1,800.
Lessons: Four lessons @ €20 each = €80
Fuel: €50 a week
Service/repair: He changes the oil and filter himself which costs about €60 to €80, twice a year.
Reason for buying: David is an apprentice carpenter and lives in a rural area about three miles from work - his only option was to get a car.
How is it working out financially? "I couldn't live without a car - I need it for work. It's worth it. You either do it or you don't. It was hard at first but I don't find it too bad now."
NAME: MICHELLE DALTON
Age: 22
Car: VW Polo
Cost: €6,500
Fuel: Minimal
Insurance: €1,360 a year
Service/repairs: It was due a service on purchase, but a friend of the family who has a garage serviced it for roughly €70
Lessons: 17 lessons taken @ €35 each = €595
Loan repayments: €160 every fortnight - this includes loan repayments and insurance
Reason for buying: Michelle bought the car earlier this year in order to drive to work. However, she hasn't had the chance to build up her driving experience as she volunteered in Ethiopia during the summer, and so is still getting two buses to work.
How is it working out financially? "I definitely notice I've a lot less money this year. I feel I'm paying for something I'm not really getting any use out of. I can't afford to keep getting lessons, so I'll have to practise at home in Longford [she works in Dublin]"
NAME: CIARAN MOONEY
Age: 25
Car: Daihatsu Sirion, which he bought in 2004
Fuel: €20 a week
Cost: €5,000
Insurance: €3,000 in first year, now €845. Ciaran switched to cheaper insurance available to teachers through Cornmarket this year, and also passed his test. Both of these factors brought his premium down considerably.
Repairs/servicing: €200 a year
Lessons: 7 lessons @ €33 = €231
Loan repayments: €400 a month
Why did you get it? Ciaran does a lot of extracurricular activities such as acting, and wouldn't have been able to get to rehearsals, performances and so on without a car.
How is it working out financially? "The insurance has become a bit more manageable, and my wages have increased so I don't find it as hard as in the beginning."
NAME: Elaine O'Leary
Age: 20
Car: Renault Clio
Cost: Present from parents for 19th birthday
Insurance: €900 this year (once she passed her test)
Repairs/service: Her father services it
Lessons: Christmas present last year
Reason for buying: Her parents had intended giving her a car for her 21st, but as she had finished a course of lessons and was able to drive they felt it would be a waste to wait.
How is it working out? "I didn't really notice it last year because I had savings and paid the insurance straight off. I don't really find it that bad, but I wouldn't have been able to afford to buy a car and pay for the insurance."
NCT €49
NCT retest €27.50
Provisional licence €15
10 driving lessons €350
Driving test booklet €17.99
Driving test appt €35.60
Driving test €38
Full licence (10 year)€25
TOTAL: €559.09