New car prices in Istanbul hit record highs this year as well as auto loan interest rates. Prices range from 120,000 to 150,000 Turkish Lira for an average new 4 door sedan car. Also, interest rates were over 20% for automobile loans. Interestingly, the prices are so high now that a person can buy an apartment for roughly the same cost. Yet, Turks still love their cars and keep buying.
Thus, why do Turks love their cars?
- Status symbol
- Convenient and easy
- Don’t like overcrowded and uncomfortable public transportation
- Security and safety concerns (perception that public transport is full of low class people who may try to steal from or assault you)
- “Turkish Dream”
What are the costs associated with buying and owning a new car in Istanbul?
Let’s assume you buy a new 1.6 liter engine car at 150,000 TL ($26,000) obtaining credit through a bank.
- Tax
- New car (50% OTV + 18% KDV)
- Annual tax (1500TL)
- Gasoline tax (50% per liter) current price: 6.86TL per liter
- Auto loan
- Interest: ≈ 20% (annually)
- Tax: 20% on your monthly interest payment
- Fees: 780TL (one time)
- Life insurance: ≈ .5% of the loan (annually)
- Insurance
- Liability: ≈ 850TL
- Full coverage: ≈ 2250TL (Kasko)
- Car inspection: 279TL (on the 4th year of ownership)
- Tolls daily (Local) (Optional)
- Bridge: 10.50TL
- Road: 3.25TL
- Maintenance (varies)
- Mandatory dealer check-up to validate warranty: ≈ 800TL
- Normal wear and tear: ≈ 600TL
- Depreciation ≈ 20% (first year)
Additionally, parking fees, traffic fines, car washes, and other upgrades can increase costs even further. Clearly, buying and owning a car in Istanbul is a huge waste of money. There are way too many costs for such a basic car. If one buys a higher liter engine or a luxury car, the taxes are over 100%.
Moreover, driving in Istanbul is no easy task with endemic traffic congestion and erratic drivers. In addition, poor road conditions make driving unsafe. For example, narrow lanes with poor marked lanes, increases accidents. One would expect the driving conditions would justify the costs. However, this is evidently not the case at all.
All in all, purchasing and maintaining a car in Istanbul is a waste of money coupled with the hazards of driving in Istanbul. Apparently, buying cars in Istanbul will continue regardless of the inflated costs. Thus, the Turkish government will continue to increase the taxes.
