Getting ready to buy your first car is a thrilling time to be alive. The excitement of getting behind the wheel for the first time meets the buyer’s panic that comes with making a big purchase, perhaps your biggest yet. But it’s a decision and choice that should be carefully thought over because it’s difficult to change your mind once you go past the point of no return.
You should have a rough budget drawn up to identify how much you can afford to spend on the vehicle itself, plus also taking all the running and maintenance costs into account. Luckily, below we walk you through some of the key costs that you should be thinking about when budgeting and searching for cars.
Purchase price
First things first, the big expense with any car purchase is the purchase price or value of the car. This can vary depending on the age, mileage and make of the car, but it’s important to buy something that is realistically in your budget so you don’t go above your means.
You can pay in total with cash or use a loan agreement either from a bank or finance lender – buying your first car with cash is usually the best option because it will avoid plunging you into debt that can swallow your disposable income for years to come. Consider what your realistic budget is depending on your savings and income level and go from there.
Insurance and breakdown cover
The purchase price is just the first cost that you have to consider, other sizeable expenses include insurance and breakdown cover. The first is a legal requirement, the second is highly recommended to avoid paying silly fees if you break down on the side of the road. Insurance for first-time drivers can be excessive but there are ways to reduce your premiums legally. A good level of breakdown cover is fairly inexpensive and is usually a recurring annual contract and payment.
Servicing and maintenance
The cost of servicing and maintenance shouldn’t be ignored. Keeping up to date with servicing is a great way to maintain the value of your car and avoid more expensive repairs and part replacements down the line. An interim car service is a good cost-effective option to have done between MOTs, with a full service done every few years. Other maintenance such as car washes, topping up oils and fluids and cleaning the interior can help to maintain a car’s value too.
Fuel
You can’t forget fuel when budgeting for car running costs. Fortunately, prices are coming back down after a peak in prices following Russia’s invasion of Ukraine, but they are still much more expensive than they were a few years ago. Consider how much you’ll be driving and use a fuel cost calculator to get an idea of how much you’ll have to budget each month.
Road tax
Road tax is an annual expense that fossil fuel car owners have to pay in relation to their level of carbon emission. Older cars usually incur more cost each year, whereas newer, hybrid and electric cars typically incur a much lower fee, if any fee at all. You might want to consider this in your car search because you could save yourself hundreds a year if you choose a more efficient or sustainable vehicle.
