Driving has become a rite of passage for most of us. But the cost of owning a car is constantly going up. Before taking the decision to become a road user, it’s important to understand the finances behind owning a car so that you don’t end up driving yourself into a sea of debt. The costs are high and you’ll need some money behind you to get you started, but there are ways to reduce spending and budget your driving so that it’s relatively affordable.
The sale price
The first cost to consider when buying a car is the sale price. In most cases, buying privately is cheaper than buying from a dealer – although this does depend a lot on the condition of the car.
Budget how much you’re willing to spend before shopping around. You may wish to save up for a few months before. Alternatively, you may be able to take out a loan (your bank may be able to offer you one or you could try out a loan site such as personalmoneystore.com).
When shopping around, don’t be afraid to haggle. Whilst bartering isn’t something we’re used to in Western society, it’s expected in bigger sales trades such as cars. Be wary of salesmen that try to throw in extra costs on top of the original price. And never buy a car without seeing it first!
Buying a car second-hand is definitely the cheapest way to do it. Those willing to take any vehicle will be surprised by how cheaply you can get some older cars – sometimes only for a couple hundred pounds.
Unlike property, most motor vehicles will get cheaper the more they age. This is known as ‘depreciation’. It’s important to take this into account when buying a car as whilst you may be able to get some second-hand cars remarkably cheap – they will most certainly have few miles left on the clock. This is fine if you’re buying a temporary convenience vehicle to get you from A to B. But if you’ve got a long road trip planned or hope to travel regular long distances over a long period of time, an older car may not be appropriate. Repair costs over the years may add up and you could pay triple the amount the car is actually worth. When it comes to selling the car, you might not be able to get much for it. You may even be forced to scrap it – losing you money.
Whilst the sale price is a big cost to consider, car insurance can sometimes work out even more expensive. All road vehicles in the UK must be covered by third-party insurance at least. If you’re a young driver you can expect to pay an extortionate amount at first, but this premium will go down over the years.
Many things can raise your insurance rate, just as many factors can lower it. Advanced driver courses and black box insurance are some drastic measures you can take to initially lower insurance. As time goes by, you should then try to avoid collecting speeding tickets or driving convictions (such as being caught driving on your phone) as these will raise your insurance.
Unfortunately making a claim can also raise insurance costs whether or not you were the perpetrator. Some companies will introduce a ‘no claims bonus’ offer to sway people into not making claims. When involved in an accident, always weigh up whether you’re more likely to spend or save money from making a claim.
All car owners must pay road tax – unless your vehicle is electric or built before 1973. Road tax is charged in bands, each band corresponding to how green your vehicle is. Band A applies to electric cars in which there are no emissions. The further up the bands that your car is situated, the more tax you will have to pay (so look for a car with a low band to avoid extra costs!).
Brand new cars pay higher tax their first year. In the second year this is reduced, sometimes by half the amount.
If you are not using a car you don’t have to pay tax on it, so long as you store it off road and declare it to the DVLA. You will have to sign a Statutory Off Road Notification (SORN).
Cars that are over three years old have to go through an annual check known as an MOT test. This test checks that your car is safe and roadworthy.
Most garages will offer MOTs – you should shop around for prices before committing. Be wary of some cheaper MOTs from garages with a low reputation. Occasionally, you may be able to save costs on your MOT test by making a few basic checks first such as checking the horn, the oil and the tyres.
The tester will let you know of any compulsory repairs that need to be made. You should also talk with the tester afterwards to gauge an idea of any future problems that you can nip early in the bud cheaply before they get worse.
Fuel is expensive and prices are unlikely to fall dramatically any time soon. You can save money by driving economically. Many modern cars will have in-built features to help you cut down on fuel consumption such as indicators to tell you when the best time is to change gear. You should consider how economical the car is before buying. Certain extras can also be bought to save fuel consumption such as fuel savers and vapour devices.
Tyres will gradually wear over time and are expensive to replace – so be careful with them. You can prevent tyre wear by keeping your tyres constantly filled up with air. Sadly, petrol stations charge you to use ‘air’, but it’s worth the cost to prevent you going through multiple tyres.
When buying new tyres don’t be tempted into purchasing cheaper half-worn tyres. These will no doubt blow out more quickly and you’ll back buying new tyres sooner than you need to be.
Servicing and repairs
Whilst careful driving can prevent damage, as well as wear and tear, you can never prepare for all faults. Some may be electronic problems which could be a result of a manufacturing fault. Reading up on car reviews before buying can help warn you of any common faults.
Timing belts will need to be replaced once a vehicle has reached the end of its mileage. This is an expensive job, but failing to get fixed could result in a catastrophic engine failure – which nobody wants!
Warning lights will tell you when there are faults in your vehicle. Some may not be too serious, but others such as brake faults should be seen to straight away. As with all the above, remember to shop around and find the best deal. If you’re making a claim as a result of a crash or vandalism, always let your insurance company know first before making repairs.
A final cost to driving that you may want to consider is parking. Where you can avoid having to pay parking charges, do it! In some cities this may be less avoidable. Always park in places that you’re allowed to park to avoid paying fines. Unless you’re disabled, parking in disabled bays and on yellow lines will get you a ticket. Consider whether your neighbourhood has parking restrictions and weigh up these costs before buying a car.
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