The Nissan Micra: A Deal, But At What Cost?

Nissan Micra in showroom-min.jpg

Starting at just $9,988, Nissan’s Micra may well be Canada’s cheapest car. The company says it’s giving consumers exactly what their looking for at this price: value.

"In the highly competitive entry-level segment, customers are looking for an array of options," says Christian Meunier, president of Nissan Canada.

"Fuel economy, style, safety. The Nissan Micra is the complete package."

For first time car buyers the Micra is a great deal, especially if you've just graduated from college or university and are dealing with new demands and existing debt. Before you buy, there are a few extra costs to car ownership you need to consider:

Extra Cost: Auto Insurance for the Nissan Micra

There is no getting around it: Your new car must be insured. It’s easy to forget just how pricey auto insurance can be, especially for younger people. For example, the car insurance premiums for a typical 22-year-old man in Toronto can cost, on average, anywhere from $3,000-$4,000 per year.

Building this into your yearly budget is important: it is illegal to drive a car in Canada without auto insurance. Before you buy any car, make sure you get auto insurance quotes so you know what to budget.

Extra Cost: Gas

If you have been relying on public transport or your own legs until now, the cost of gas can come as a nasty surprise. Small cars, like the Nissan Micra, are good on fuel when compared to larger cars, SUVs and trucks. The cost of gas in Toronto is roughly $1.30/litre; 1.31/litre in Vancouver. If you’re in Quebec or the Maritimes, you’re looking at more than $1.35/litre.

The Micra’s fuel tank holds about 41 litres - so you’re looking at $50+ every time you need to fill up.

Extra Costs: Maintenance And Depreciation

Of all the extra costs of car ownership, this one is the sneakiest. Every year you own a vehicle, its value depreciates while the maintenance costs add up. Necessary vehicle repairs are difficult to predict but when they hit, they hit hard.

The Canadian Automobile Association says depreciation and maintenance cost drivers $5,880 per year on average, for cars the size of the Nissan Micra. It is by far the largest after-sale expense for vehicle owners. Depreciation isn't a noticeable expense until you resell your car. Every year you own your vehicle, the value goes down.

A Lot To Consider: Buying A New Vehicle

Buying a new vehicle, even one as affordable as the Nissan Micra, is a big undertaking.

According to CAA’s car cost calculator, the car will cost nearly $10,000 a year, over a 5-year period. This looks at gas, maintenance/depreciation, auto insurance and registration.

It may be simply too expensive, if you've just graduated from university or college. Car companies will assure you buying a vehicle is the best way to mark your milestone, but there are other options. Here are a few ideas with less-expensive insurance costs:

Take a trip - If you've chosen to celebrate with a getaway (and who wouldn't want to?), travel insurance can save you tons of money in a pinch. For example, emergency medical insurance for someone in their 20s taking a 7-day trip to Cuba can cost as little as $15.

Get an apartment - If you’re moving out of residence or have decided to leave your parents home and branch out on your own, you’ll need home insurance for tenants. Fortunately, it costs much less than auto insurance. For a 20-something moving into an apartment in Toronto, tenant’s insurance costs approximately $300 per year (plus tax).

If you’re still sold on car ownership and the Nissan Micra is in your price range, the vehicle will be available in April 2014.