Choosing whether or not to purchase a new car can be a hard decision and you might be thinking that driving away in a new set of wheels is a little outside of your reach. But it might be more affordable than you think! We've put together a list of costs involved so you're fully prepared and can set the right budget to purchase your dream car.
What's the monthly cost of owning a car?
When owning a car, there are monthly costs to consider so we've compared some of these costs to everyday items to make them easier to understand - your dream car might be closer than you think.
Car finance cost
If you choose to finance your car through Personal Contract Purchase (PCP) or Hire Purchase (HP), remember to include your monthly loan payments in the budget. This might be less than you think. Here at Carbase, we have a range of cars for around £100 a month - the cost of buying a daily coffee on your way to work. Or perhaps you're looking to spend around £200 a month - that's still only the cost of a weekly family trip to the cinema with all the snacks!
Don't forget your car tax... This is usually an annual fee but can also be paid monthly if you find this easier to manage. The amount of car tax you pay depends on factors such as the type of vehicle, its CO2 emissions, fuel type, and its age.
Another monthly cost is car insurance which varies based on factors like your age, driving record, location, and the type of coverage you choose. According to NimbleFins, the average annual cost of insurance is £484 - that's around £40 a month! That's the average cost of a monthly gym membership and we all know a new car is much more exciting than going to the gym...
Although we never link to think it'll happen to us, cars do break down. An optional monthly cost for your breakdown cover can be around £5 or £6 a month - roughly the same as a couple of monthly chocolate bars. But when you buy a car from Carbase, you get 12 months of free breakdown cover, including At Home, Recovery, and Roadside.
To drive anywhere you need fuel! Although your fuel costs will vary depending on the type and how you drive, there are ways you can reduce your fuel consumption and therefore reduce the monthly cost. If you live near a ULEZ or CAZ area, remember you might be charged if your car has high emissions. Why not consider moving to a hybrid or electric vehicle to not only reduce your fuel bill but also reduce emission charges.
How much is a car?
So you've decided to buy a new car? Whether it's your first or tenth, buying a new car is exciting! But you might wonder how much the initial purchase will cost you. There's no set figure as the cost of your new car will widely depend on a variety of factors such as:
- The make and model.
- The condition of the car.
- How old is the car and how many miles has it done.
- It's body type - are you after a nippy hatchback or a family-friendly saloon?
No matter what car you're looking for, it's best to shop around to ensure you're getting the best price for the right car.
Other costs of owning a car
On top of those monthly costs, don't forget your regular maintenance costs! You may think that having a regular service isn't necessary but don't forget that ensuring your car runs smoothly can prevent any costly unexpected breakdowns or wear and tear.
Your annual MOT test should be on top of your car maintenance list and can legally cost no more than £54.85, as set by the UK Government. In addition to MOT, regular servicing is crucial for maintaining the performance and longevity of your car. The cost of servicing varies based on the make and model of your vehicle, the service package you choose (e.g. minor or major service), and any additional repairs or parts required.
How does the cost of owning a car compare with everyday items?
So, it looks like the cost of owning a car might be less than you first thought but to help you make a final decision, we've put together this comparison between the cost of owning a car and everyday items.
Buying a car with fixed monthly payments at Carbase
Here at Carbase, we try to make financing your next car as simple and easy to understand as possible, with different finance deals designed to meet your budget.
Hire Purchase (HP)
One option is to use Hire Purchase; a finance agreement that allows you to spread the cost of the car over an agreed period, between 12 to 60 months. With HP, you typically pay a deposit upfront (although here at Carbase we do offer £0 deposit options in some cases), and then pay off the remaining balance, plus interest, in monthly instalments over your agreed term. Once you have paid off the balance, you own the car or van outright.
Personal Contract Purchase (PCP)
Another popular form of car finance is Personal Contract Purchase. PCP agreements are usually between 12 to 48 months and they work in a similar way to a hire purchase agreement, but with PCP, you don't automatically own the car outright at the end of the agreement. Instead, you have three options at the end of the agreement:
- Return the car
- Pay a final "balloon" payment to own the car
- Use any equity in the car to put towards a deposit on a new car.
Buying with Carbase
Buying a new car is an important decision and if you choose to use one of our finance options, it's essential to choose the option that's best suited to your needs and circumstances. Our friendly team is here to support you in making the right decision for you and your needs.