For new car buyers, it’s a common mistake to get caught up in the asking price while forgetting about the overall cost of car ownership. If you’re in the market for a new vehicle, start thinking about running costs in addition to the sticker price as you work out a feasible budget. You may see a great deal on a convertible sports car that seems impossible to resist, but will you really be able to afford the cost of fuel and maintenance? It’s important to take the following factors into consideration as you create your initial car-buying budget.
Naturally, the first thing you’ll need to do is narrow down your options to a range of starting prices that you can afford. Seemingly similar cars can vary in price, as you can see in this article comparing the Audi A3 Sedan to more expensive competition. Think about whether or not you’ll be taking out a loan to pay for this car. If so, look at what monthly payments might look like. How much can you really afford to put aside each month to repay a car loan? Don’t stray from that figure at the dealership.
Fuel is one of the most significant running costs that will impact your finances on a daily basis. Rugged SUVs can be surprisingly affordable, but oftentimes they make up for it with less than perfect fuel economy. New cars come with an official MPG figure, but it’s better to use these for comparison purposes rather than as a realistic figure. The only way to see what type of fuel economy you can really expect is to take the car for a test drive. Take a look at the CO2 emission rating as well, as this will impact road tax.
Car insurance is another necessary running expense that should be added to your budget. Insurance will vary widely depending on the make and model of car, your driving record, and even your occupation. To work this into your budget, try running the details of the car you’re interested into an insurance price comparison website (or several).
Repairs and Maintenance
If you’re purchasing a brand new car, it should be covered for at least a year under a manufacturer’s warranty. This will take care of any repairs for the first few years. If you’re buying used, you can expect to pay repairs and maintenance out of pocket. Factor in the cost of annual servicing, which should include a thorough check-up and oil change. The cost of servicing is another factor that can vary, so it’s worth shopping around to find a reliable garage with fair prices. Independent garages may offer better deals than dealer garages, for example.
It’s often overlooked, but one of the biggest costs of car ownership is actually depreciation in value. When you buy a new car, it starts losing value the minute you drive it off the lot. As a result, many models have lost half of their starting value only three years after the initial purchase. If you’re planning to buy a car that will last you for the next decade, this won’t be too much of a worry. However, if you plan to trade your car in only three years down the line, this is a very important budgeting factor.
These are all ongoing costs that should be added to your budget before you start shopping around. This allows you to see the big picture and avoid any costly mistakes.