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What are the different costs to consider when buying a car?

What are the different costs to consider when buying a car?

Buying, owning and running a car involves a number of costs that are crucial to consider to determine if it’s affordable for you. Read this blog to know which factors to consider.

When looking to purchase or finance a car, it’s important to calculate just how much you can afford so you can budget payments correctly.

In addition to just the initial purchase price, owning and running a car involves a number of potential other costs that you need to take into consideration to get the best vehicle for your needs. There’s no point paying for a car that you then can’t afford to run!

To make sure you take into account everything you need to know in your budget, we’ve broken down the major additional costs you should be aware of.

What is the average cost of running a car?

According to Kwik Fit, the average cost of running a car per year in the UK is almost £2,000; not including the initial cost of purchase. With lots to consider, if you’re looking to finance a new car, you should be aware of the following costs:

Fuel type

A key consideration to make when looking at the costs of running a car is the type of fuel your new vehicle will use – notably petrol or diesel. For a long time, diesel was cheaper to buy than petrol. But in more recent years, petrol prices have dropped below diesel and fuel efficiency has been much improved.

You may also want to consider a hybrid or electric car. These have become more popular in recent years and have the potential to be cheaper than both petrol and diesel vehicles.

Car insurance

Another major cost of running a car is insurance. Insurance can vary significantly depending on the car you choose, and costs will likely come down to how well the vehicle scores on a company’s level system.

Car insurance companies work to a 50-level system (it was previously a 20-level system), with group 1 being the cheapest group and 50 the most expensive. Generally speaking, smaller, less powerful cars will sit in the lower insurance groups, while high-powered, sporty, and exclusive cars fill out the higher groups.

Another consideration to make is that choosing a car with enhanced safety features, such as autonomous emergency braking (AEB), can potentially lower your insurance premiums.

With insurance, it’s essential to shop around to minimise the overall cost of running a car. Getting the cheapest car insurance can be time-consuming, but it really is worth the effort.

In fact, research by comparethemarket found that the average customer could save up to £225.87 when comparing policies. This is based on online independent research by Consumer Intelligence collected in 2021, which revealed that 50% of customers could achieve this saving on their car insurance premiums.

Road tax

Road tax, also known as Vehicle Excise Duty, should always be considered when looking at the average cost of running a car. Tax rates can vary significantly, so it is essential that you make note of what vehicle tax band your potential purchase is in before buying.

For used cars bought or made before the end of March 2017, road tax can go from £0 to £535 per year. Newer cars (those made after March 31st, 2017), can be taxed at rates from £0 to £2,000. Therefore, it’s essential that you find out exactly what tax you will be paying to assess whether or not you can afford it.

For more information about how much you might have to pay, check out our complete guide to car tax.

Miles per gallon

Regardless of whether you purchase a petrol, diesel, hybrid, or fully electric car, one of the most important considerations to make isn’t necessarily the cost of fuel, but how many miles you get for each gallon (or EV equivalent) that you purchase.

In general, the smaller and more efficient the car, the more miles you will get to the gallon, thus spending less on fuel.

For example, if you buy a gallon of fuel for a Citroen C1 VTi at approximately £5, you should get 68.9 miles to the gallon. Buying the same amount of fuel, however, for a Mazda RX-8, will give you just 26.7 miles.

Over the course of a year, if you drove 6,000 miles in the Citroen, it would cost you approximately £435 for fuel. However, with the Mazda, it would cost you approximately £1,125. That’s more than double!

A vehicle’s MPG can make a major difference in the cost of having a car, so it’s important to consider fuel efficiency and economy when picking your new vehicle.

Car repair costs

While fuel and economy are certainly among the main costs associated with running a vehicle, it’s a fact of life that no matter how good a car you buy, it will need repairing at some point.

Whether you choose to use main dealer servicing or independents, which are usually cheaper (prices at franchises linked to car makers are up to 40% more expensive than independent garages), you’ll likely find that some makes of car are more expensive to repair and maintain than others.

If you’re considering purchasing a particular brand of car and want to keep a tight rein over future repair costs, it’s well-worth enquiring about the price of regular servicing and how much typical repairs are.

If you want to keep potential repair costs even lower, it may also be worth enquiring about an extended warranty. These are available directly from the appropriate manufacturer or third-party providers, and for one yearly cost, cover you for a range of potential repairs.

However, it’s important to look at the fine print of such policies to fully understand what they cover.

Other costs of having a car

While all of the above points are crucial things to consider with any car purchase, you may also want to think about miscellaneous costs that can build up over time or come out of the blue.

First and foremost, if you’re a commuter who uses public car parks, you may want to budget for parking costs. It may not seem like much on a daily basis, but if you were to pay even just £4 for parking every working day of the year, the cost would exceed £1,000 overall!

Another thing to consider is the various cleaning materials you might need to keep on top of your car. These aren’t overly expensive, but if you find you need to buy them during a financially tight period, then they might take up an unnecessarily big portion of your budget.

Lastly, while no driver ever expects to receive one, sudden fines can be an expensive problem to solve, depending on the seriousness of the offence.

Considering all of these factors when purchasing a new car might seem a lot, but in doing so, you’ll be ensuring that you can find a vehicle that is more than suitable for your budget.

If you have budgeted for all these but find you can’t afford to buy the car you want outright, why not consider opting for car finance? We have various financing options at Zuto, including bad credit car finance.

Get in touch with our team today to find out how we can help, or check out our car finance calculator to see how much you could borrow.

Sources:

https://www.nimblefins.co.uk/cheap-car-insurance/average-cost-run-car-uk

https://www.moneyshake.com/car-finance-guides/maintaining-your-lease-car/how-much-should-car-maintenance-cost-per-year

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