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A Guide to Buying a Car in Japan




Owning a car in Japan, especially if you live outside of Tokyo in the suburbs or rural areas, can offer significant convenience and flexibility. It will help you to commute for work efficiently, do groceries shopping conveniently, and visit countryside attractions at your leisure. If you have a family or lead an active lifestyle that involves outdoor activities such as hiking, camping, or sports, owning a car provides the flexibility to transport equipment and accommodate the needs of multiple passengers comfortably.


Buying a car in Japan is an exciting yet complex process, especially for foreigners who may not be familiar with the language or local customs. In this comprehensive guide, we will walk you through each step of the process, providing valuable insights and practical tips to help you navigate the Japanese car market with confidence and ease.


How Much It Cost to Have a Car

While the convenience and flexibility of owning a car in Japan can be appealing, it's essential to consider the costs carefully. Beside the initial purchase cost, you will also have to pay taxes, insurance, vehicle inspection regulations, and other associated costs. 


1. Taxes

   - Automobile Tax (Jidosha-zei): Owners of automobiles in Japan are required to pay an annual automobile tax, which varies depending on the vehicle's engine size and environmental performance. For example, smaller and more fuel-efficient cars generally incur lower taxes, while larger, high-performance vehicles may face higher taxes. On average, annual automobile tax costs can range from ¥30,000 to ¥80,000. This tax is typically collected by local municipalities.


   - Weight Tax (Juryo-zei): In addition to the automobile tax, there's a weight tax based on the vehicle's weight, calculated in accordance with the Road Trucking Vehicle Law. The weight tax typically ranges from ¥10,000 to ¥80,000 and is paid when buying a new car and every time the shaken is renewed.


Calculating car tax


2. Insurance

   - Compulsory Insurance (Jibaiseki Hoken): Every vehicle owner in Japan is required to have compulsory insurance to cover personal injury and property damage caused by their vehicle. This insurance is mandatory and must be obtained before registering the vehicle. It typically covers medical expenses and compensation for third-party injuries or property damage. On average, compulsory insurance can range from ¥30,000 to ¥40,000 per year.


   - Optional Insurance (Nin'i Hoken): While not legally required, optional insurance, such as comprehensive insurance (zenkoku hoken), offers additional coverage for damage to your own vehicle, theft, and other risks. This type of insurance provides greater peace of mind but comes with additional costs. Costs for optional insurance depend on coverage levels and the insurance provider but can add several tens of thousands of yen to the annual insurance premium.


3. Vehicle Inspection Regulations

   - Shaken (Periodic Vehicle Inspection): All vehicles in Japan, both new and used, must undergo a mandatory vehicle inspection known as "Shaken" (Kensa-shiken). Shaken is conducted when buying a new car, three years after, and every two years since then. During the inspection, the vehicle's safety and emissions systems are thoroughly checked to ensure compliance with Japanese regulations. Shaken also includes a review of various components such as brakes, lights, tires, and exhaust systems. Passing the Shaken inspection is essential for vehicle registration and continued legal operation on Japanese roads. On average, Shaken inspections range from ¥100,000 to ¥200,000.


   - Emissions Inspection (Gasoline Emission Inspection): This inspection assesses a vehicle's emissions to ensure compliance with environmental regulations. It is part of the Shaken inspection process and is aimed at reducing air pollution and typically incurs additional costs of around ¥5,000 to ¥10,000.


4. Additional Considerations 

   - Parking space: It is mandatory to have a parking space within 2 kilometers of your home. If your building has parking space, it may not cost anything. However, if you don't have access to parking, you'll need to rent a parking lot, which can cost from ¥2,000 in the countryside to ¥100,000 in business districts of Tokyo per month. Additionally, short-term parking usually ranges from ¥100 to ¥500 per hour or ¥5,000 per day.


   - Driving License: While not directly related to owning a car, having a valid Japanese driver's license is a legal requirement for operating a vehicle in Japan. Foreign residents are typically required to obtain a Japanese driver's license within a certain period after their arrival in Japan, depending on their visa status. Costs can vary depending on the type of license and driving school, but they generally range from ¥200,000 to ¥350,000.


5. Fuel and Tolls

Fuel prices in Japan are relatively high compared to some other countries, approximately ¥110/L. Toll roads are also expensive, especially for long-distance travel, which can increase the cost of driving. 


Understanding these estimated costs is crucial for budgeting and planning when considering owning a car in Japan. It's essential to factor in these expenses along with the purchase price of the vehicle to determine the overall affordability and feasibility of car ownership in Japan.


How to Buy a Car in Japan

Now that you have an estimated budget and are ready to purchase a car, here's a guide to help you navigate through the process:


1. Research

Consider your budget, the type of car you need (sedan, SUV, compact, etc.), fuel efficiency, size, and features. As you're in Japan, you might as well explore Japanese cars. In general, Japanese cars like Toyota, Honda, Nissan, and Subaru tend to be more affordable in Japan compared to foreign cars. The competition among these companies results in competitive pricing for Japanese-made vehicles.


Moreover, you can also find exclusive models tailored specifically for the domestic market in Japan, which usually feature unique designs, specifications, and features that cater to the preferences and needs of Japanese consumers. These consumers tend to prioritize factors such as reliability, fuel efficiency, and resale value when purchasing cars, all of which would benefit them in the long run.


Car dealership in Japan


2. Decide on New or Used

New cars offer the latest technology, safety features, and warranties, providing peace of mind to owners. Being the first owner means you avoid any history of previous usage, potential wear and tear, or hidden issues. Moreover, new cars often come with manufacturer warranties, covering repairs and maintenance for a specified period, and typically boast better fuel efficiency and lower emissions, potentially saving on long-term fuel and tax expenses.


On the other hand, used cars are more budget-friendly and often regarded as excellent bargains in Japan, primarily due to the shaken system. Many owners choose to sell their cars instead of paying the shaken renewal fees, which can cost between ¥100,000 and ¥200,000 every few years. This phenomenon results in a market where the majority of used cars for sale are either 3, 5, 7, 9, or 11 years old. When considering purchasing a used car, it's essential to check the remaining length of the shaken.


With a wide selection of pre-owned vehicles available in the market, buyers have the opportunity to choose from various makes, models, and price ranges to find the best fit for their needs. Used cars also depreciate at a slower rate than new cars, benefiting future resale or trade-in value. However, buyers must exercise caution, conducting thorough research and inspections to ensure reliability. While used cars provide immediate cost savings, buyers should budget for potential maintenance and repair expenses associated with older vehicles.


3. Find a Dealer or Seller

Buying a car from a dealership offers assurance and support throughout the purchasing process, often including warranties, financing options, and after-sales services like maintenance. Many dealerships provide English assistance and handle paperwork, eliminating the need for a Japanese translator. Dealerships also adhere to strict regulations, ensuring transparency in the vehicle's history and documentation, thus reducing the risk of undisclosed issues.


On the other hand, purchasing from a private seller may offer cost savings, as they have fewer overhead costs and may be motivated to sell quickly. You can find private sellers on websites like Goo-net Exchange, CarSensor.net, Rakuten CarMarket, or Facebook groups. The downside is that you'll need to handle all the paperwork yourself and won't have access to financing options.


Alternatively, you can explore auction sales, where you can easily bid within your budget. However, whether dealing with a dealer or private seller, negotiating is key. Conduct thorough research, establish your budget, communicate clearly, and be prepared to walk away if terms don't meet your expectations.


4. Complete the Paperwork

Once you have a deal, you have to register your car or complete a transfer of ownership process. Reputable dealers will assist you, but if they don't or if you buy from private sellers, be prepared to fill out all the forms in Japanese. You will need a certificate of your signature issued by your embassy or a certificate of personal seal issued by the municipal office, a parking space certificate issued by a police department, and your foreign resident card. Arrange for the delivery or pick up of the car once all paperwork and payments are completed.


 

By following the steps outlined in this guide, from understanding the legal obligations and costs associated with car ownership to exploring the options available at dealerships and private sellers, you can make decisions that suit your needs and circumstances. Whether opting for a new or used vehicle, being prepared and thorough in research and negotiations will ultimately lead to a smoother and more satisfying car-buying experience in Japan. With the right knowledge and preparation, owning a car in Japan can offer convenience, freedom, and endless opportunities for exploration in this beautiful country.

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