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Monday 30 September 2024

Ultimate guide to budgeting for your first car

**Collaborative Post**

Passing your driving test is a huge milestone and one that means you can become more independent. But first, you have to hit the next big milestone of buying your first car, but it requires careful planning to make sure that you can buy sensibly and can afford to stay on the road. While it is easy to get carried away with the latest trends and the best first car models that you see online, you should try to put your needs and budget first when it comes to looking for a car. 

Put together a shortlist of all your wants and needs from a car along with your budget and go from there. With a shortlist in mind, you’ll be ready to start saving for your first set of wheels.

Here are our top tips to help you get ready for this big commitment in your own time.

1. Determine How Much You can Afford

Firstly, you’ll need to find a way to set your expectations now. Knowing roughly how much you can spend will help you to create a shortlist of similar models that you’d be happy to choose from.

Review your income, savings, and current expenses. Upfront costs will also include the vehicle registration and road tax, plus any repairs or replacement cars needed to get the car in top shape. 

Try to spend no more than 15-20% of your total monthly income on car costs. With an accurate prediction of your payment schedule, you can then decide whether you’ll pay upfront or finance the car with a loan.

2. Remember Ongoing Costs

Remember that motoring costs involve much more than just the initial fees and the price of the car itself! A few ongoing expenses include:

Insurance: Every car needs to be insured to legally drive on UK roads. You’ll face higher premiums as a new driver, so seeking affordable young drivers insurance is vital

Fuel: Think about your new car’s fuel economy and your potential mileage to estimate your future spending. This should be factored into a weekly and monthly budget, with some wiggle room.

Maintenance: Servicing and repairs costs are unavoidable. Keeping your car in good condition means it’ll be more likely to pass its MOT, but you’ll need to budget hundreds every year for this. 

Depreciation: Every car is an investment, so keep in mind that a brand new car will lose its value quickly. Choosing a used car could save you money in the long run. 

3. Look into Financing

Next, it’s time to think about how you’ll pay for the car.

Loans make an attractive option for new drivers with good credit scores. If this could work well for you, take the time to compare interest rates from banks or dealerships to find the best offer. 

Leasing could work well if you’re looking for short-term ownership. Benefits include lower monthly payments and access to newer, higher-specification vehicles. Road tax is usually included in the cost, too. 

However, the best long-term operation is buying the car outright. When you learn how to maintain your car, you could preserve most of its value too.

4. Choose the Right Model

Once you’ve gained a better idea of your budget and how you’ll cover the costs, it’s time to choose the right car!

Do your research to find cars that fit both your price range and needs. Is fuel efficiency the most important feature for you, or would you rather drive a spacious and powerful car? If you’re living in the city, an electric car could help you save even more throughout the month.

Compare new, used, and approved pre-owned versions of the same model to see where the best value for money lies. And though impulse buying might feel tempting when you see the perfect pick, don’t rush into a decision. 

Take your time to find the best deal. With careful thought and sensible planning, driving can be equally rewarding and hassle-free.

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