What costs do you need consider when buying a car?

What costs do you need consider when buying a car?

When looking to purchase a new car, it’s important to ensure that you calculate just how much you can afford, in addition to just the purchase price. Buying, owning and running a car involves a number of costs so it’s important to consider them all, to get the best vehicle for your needs, within your budget. Let’s take a look at some of the cost considerations…

How much does the car I want cost to tax?

Road tax, also known as Vehicle Excise Duty, should always be considered when looking at purchasing a new vehicle. For used cars bought made before the end of March 2017, road tax can go from zero to £535 per year. Newer cars, made after March 31 2017 can be taxed at rates from zero to £2000, therefore it’s essential that you find out what exactly you will be paying and assessing whether you can afford it.

For cars registered between March 2001 and the end of March 2017 the rate of vehicle tax is based on fuel type and CO2 emissions. The bands are as follows:

A: Up to 100: £0

B: 101 - 110: £20

C: 111 - 120: £20

D: 121 - 130: £115

E: 131 - 140: £135

F: 141 - 150: £150

G: 151 - 165: £190

H: 166 - 175: £220

I: 176 - 185: £240

J: 186 - 200: £280

K: 201 - 225: £305

L: 226 - 255: £520

M: Over 255: £535

Since April 2017, the way car tax is calculated has changed. Car vehicle tax rates are based on either engine size or fuel type and CO2 emissions, depending upon when the vehicle was registered.

0 CO2 emissions (g/km): £0
1 - 50 CO2 emissions (g/km): £10
51 - 75 CO2 emissions (g/km): £25
76 - 90 CO2 emissions (g/km): £100
91 - 100 CO2 emissions (g/km): £120
101 - 110 CO2 emissions (g/km): £140
111 - 130 CO2 emissions (g/km): £160
131 - 150 CO2 emissions (g/km): £200
151 - 170 CO2 emissions (g/km): £500
171 - 190 CO2 emissions (g/km): £800
191 - 225 CO2 emissions (g/km): £1,200
226 - 255 CO2 emissions (g/km): £1,700 Over 255 CO2 emissions (g/km): £2,000

All of the figures above are based on paying road tax in full. Payment can be made on a monthly basis but this comes at a small additional cost. As you can see, rates can vary significantly so it is essential that you make note of what vehicle tax band potential purchases are in before buying.

Petrol or diesel?

One of the main considerations when looking at fuel cost is whether to purchase a diesel or petrol car. For many years, diesel was cheaper to buy than petrol and had a greater fuel economy, leading it to be the fuel of choice for anyone driving high mileages such as taxi drivers or sales reps. However, in more recent years, petrol has been cheaper to buy and fuel efficiency has much improved. Diesel has also had somewhat of a bad press recently as it’s not the most eco-friendly of fuels and there’s talk of diesel cars being banned from many major cities in years to come.

Miles per gallon (MPG)

Regardless of whether you purchase a petrol or diesel car, (or indeed a hybrid), the most important consideration isn’t actually the cost of the fuel itself, but how many miles you get for each gallon of fuel that you purchase. In general, the smaller and more efficient the car, the higher the 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 (cost approximately £5), according to official figures, you should get 68.9 miles. Buy the same amount of fuel however for a Mazda RX-8, and you’ll get just 26.7 miles. Over the course of a year’s driving, 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 £1125, more than double. As you can see, the differences can be sizeable so it’s important you consider fuel efficiency and economy when purchasing a newer car.

This type of information is easy to research by looking at a car’s specificaitons online.

What does it cost to insure?

Insurance can vary significantly depending upon the car that you choose. Car insurance companies now work to a 50 mark system, rather than the previous 20 level system. Group 1 is the cheapest group and 50 is the most expensive. Knowing that the number of categories have changed is really important to remember - you don’t want to be caught out thinking that a car in the Group 15 category is in the bottom third of insurance groups rather than the top quarter. Generally speaking, smaller, less powerful cars are in the lower insurance groups with high powered, sporty and exclusive cars being in the higher groups.

Another insurance consideration is that by choosing a car with enhanced safety features such as autonomous emergency braking (AEB) can lower your premiums. Sometimes it can be worth looking into cars with extra safety features as it can save you money on insurance in the long run. For example, the Toyota Yaris is one of the cheapest cars to insure according to uSwitch, thanks to its impressive safety rating, much of which is due to having AEB fitted. However, if you were to purchase a Mercedes Benz CLS Class, although it has a host of impressive safety features, it will still be very expensive to insure thanks to the fact it is a top-of-the-range model that is expensive to buy, run and maintain.

It’s essential to shop around. Getting the cheapest car insurance be time consuming but it really is worth the effort.

Repair costs

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 and repairs or independents (which are usually cheaper), you may find that some makes of car are more expensive to repair and maintain than others. If you are considering purchasing a particular brand of car and want to keep a tight rein over future repair costs, it is worth enquiring about how much regular services cost and how much typical repairs are. According to a report in the Daily Mail, prices at franchises linked to car makers are up to 40% more expensive than independent garages.

If you want to have an even tighter rein over future repair costs, then it may be worth enquiring about an extended warranty. These are available from the manufacturer or third party providers and for one yearly cost cover you for a range of potential repairs. It’s important to look at the fine print of such policies however as some are more comprehensive than others.

Consider all of these factors when purchasing a new car and you should ensure that you get one that is suitable for your budget.

Need some help crunching the numbers to determine your monthly affordability? Use our Car Finance Calculator here

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