Buying a Car in Japan
Thursday, January 23, 2025
A comprehensive cost benefit analysis.
When considering whether to purchase a car in Japan, it’s important to evaluate the financial and lifestyle factors that come into play. This analysis provides a detailed look at the costs and benefits of car ownership in Japan
The primary advantage of owning a car is the enhanced convenience it offers. Car ownership allows for flexible travel times, direct access to destinations, and the ability to transport people and goods efficiently. This is particularly beneficial for those who frequently travel to rural or remote locations not well-served by public transport.
While, having a private vehicle can mean avoiding the hassle of crowded public transport and the stress of navigating through congested areas in a crowded train or bus, driving around big cities in Japan also has drawbacks. Traffic congestion can result in longer travel times, parking in central areas is pricey and can be a hassle, and Japan’s zero-tolerance laws for drinking and driving force a choice between commuting by car or having a few drinks.
Purchasing a Car
Standard new cars in Japan range from ¥1,500,000 to ¥4,000,000 depending on the make and model. In contrast, secondhand cars offer a more budget-friendly option, with prices generally between ¥500,000 and ¥2,000,000. While secondhand cars are less expensive, they may come with higher maintenance costs and shorter warranties compared to new vehicles.
There are 3 main ways to purchase a car in Japan:
Cash Purchase involves paying the full vehicle price in one payment. This method eliminates interest or fees and grants you full ownership of the car, allowing you to modify or sell it freely.
Loan Purchase allows you to finance the vehicle and repay the amount in installments. This option lets you own a car without needing to prepare a large sum upfront, and in some cases, you can sell the car even while paying off the loan.
Car Lease is a service where you pay a fixed monthly fee to use a vehicle owned by the leasing company. It requires no upfront costs, and expenses like taxes, inspections, and maintenance are often included in the monthly fee, making budgeting easier. However, you must return the car at the end of the lease term, and restrictions may apply, such as mileage limits or customization.
Ongoing Expenses
Insurance. Annual premiums vary depending on the following factors:
- Driver’s age
- Location
- Yearly mileage (expected)
- Make and model of the car
- Owner’s driving history
Average insurance premiums by vehicle type (based on insurance comparison data between April 2023 and March 2024)
- Standard Private Cars: Approximately ¥72,331
- Small Private Cars: Approximately ¥54,806
- Kei Cars (yellow plate): Approximately ¥49,511
Drivers also have the choice between 車両保険なし/sharyou hoken nashi (no vehicle insurance) & 車両保険/sharyo hoken (vehicle insurance included).
車両保険なし(Without vehicle insurance) : The minimum legal requirements for insurance in Japan. This usually refers to the basic automobile liability insurance (自賠責保険), which covers only injuries to others (third-party liability) in case of an accident but does not cover the driver’s own damages, injuries, or damage to the vehicle.
車両保険 (Comprehensive vehicle insurance) : Complete and optional insurance policy, which typically covers:
- Third-party liability (injuries or damage to others).
- Own vehicle damage (such as from collisions, accidents, or natural disasters).
- Theft, fire, or vandalism.
- Personal injury to the driver or passengers in case of an accident.
Fuel. Monthly fuel costs average ¥10,000 to ¥20,000, influenced by driving habits and fuel prices.
Inspection and Maintenance. Two kinds of inspections are required if you own a car in Japan. 12-month inspection/tenken (12ヶ月点検) and the vehicle inspection/shaken (車検).
12-Month Inspection (12ヶ月点検). Approximately ¥10,000 ~ ¥20,000 for the inspection.
A legally mandated annual inspection focusing on maintaining vehicle safety and preventing potential issues.
Involves checking the mechanics of the car, such as brakes, steering, and engine systems, to ensure proper functioning. If repairs or replacements are required (e.g., tire change, oil change), those costs are separate.
While there are no direct penalties for not conducting this inspection, neglecting it can lead to safety risks and costly repairs.
Vehicle Inspection (車検). Approximately ¥45,000 ~ ¥80,000 or higher depending on the make, model, and age of your vehicle.
A mandatory inspection to ensure vehicles meet safety and environmental standards at the time of inspection.
For private passenger cars, the first inspection is required three years after initial registration, followed by inspections every two years.
Driving a vehicle with an expired inspection can result in penalties, including license suspension or fines.
Parking.
To purchase a car, you have to prove that you have a legal parking spot (street parking is not permitted for this). In urban areas, monthly parking fees can range from ¥20,000 to ¥50,000. In suburban or small-town settings, fees are generally lower, ranging from ¥5,000 to ¥15,000. Of course, if you have a house with a garage, the blueprints of your home can be used as proof of a parking spot.
Road Taxes/Jidosha-zei. Vehicle owners must pay an annual road tax based on the engine size. For example, the tax for a car with a 1,000 cc engine is around ¥30,000 while a 3,000 cc engine can incur a tax of approximately ¥60,000.
Usually, this tax is levied on April 1 and needs to be paid by the end of May.
Other things to consider
Drivers License: If you are a resident of Japan (i.e. have a residence card) you are not permitted to drive with an international license. Depending on where you are from you can automatically convert your license or you have to take a short written and driving test to obtain a Japanese license.
If you are caught driving with an international license, you will be suspended from driving in Japan and will need to get a brand new license (like 18-year-olds). The cost, time, and mental stress of the situation are not worth the risk.
Speed Limits: Speed limits are strictly enforced in Japan. On expressways, the limit is generally 60~100 km/h, while in urban areas, it is typically 40 km/h.
Drink Driving: Drink Driving is strictly prohibited in Japan and comes with hefty penalties and fines for the driver, the owner of the car, the passengers in the car, and the establishment that served the alcohol
Penalties for Drivers:
Driving Under the Influence (酒酔い運転):- Criminal penalty of up to 5 years imprisonment or a fine of up to ¥1,000,000.
- 35 violation points, leading to license revocation with a minimum ineligibility period (for driving) of 3 years. After that, you will have to obtain a brand-new license (like an 18-year-old).
- Criminal Penalty of up to 3 years imprisonment or a fine of up to ¥500,000.
- 13-25 points deducted from your driving record and license suspension of 90 days or license revocation with a minimum ineligibility period (for driving) of 2 years, depending on the blood alcohol readings on the breathalyzer.
Penalties for Non-Drivers:
Vehicle Providers (if someone drives your car under the influence):- If the driver commits driving under the influence: Up to 5 years imprisonment or a fine of up to ¥1,000,000.
- If the driver commits driving with alcohol present: Up to 3 years imprisonment or a fine of up to ¥500,000.
- If the driver commits driving under the influence: Up to 3 years imprisonment or a fine of up to ¥500,000.
- If the driver commits driving with alcohol present: Up to 2 years imprisonment or a fine of up to ¥300,000.
Deciding whether to own a car in Japan depends largely on one’s living situation and personal needs. For urban residents, the costs and inconveniences associated with car ownership may outweigh the benefits, especially when efficient public transport is readily available. Conversely, for those living in suburban or small-town areas, the flexibility and convenience of a car can be significant advantages. Ultimately, individuals must weigh the financial costs, convenience, time efficiency, and lifestyle considerations to determine the best option for their circumstances.
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