Car Finance

Breaking Down the Costs of Financing a Car

New car

When new drivers and first time buyers consider what it will cost to finance a car they often stop at step one: the initial purchase.

Financing a car is more than just buying the vehicle though, as there are a lot of further bills and payments which need to be made.

Before deciding to buy a new car it is important you consider all the costs involved and work out if you will be able to comfortably finance it. You may find that affording the new BMW you were after may not be as easy as first thought.

Initial Purchase

Saving up and paying for a car up front always works out as the cheapest method in the long run. This will likely provide the largest short-term expense for acquiring a new vehicle. However, not everyone can afford that or they don’t require owning a car full-time.

There are other methods available to finance your new car. Leasing involves paying monthly to run a car without actually owning, whereas hire purchase follows a similar route but you own the car after all payments have been made. There are numerous places to seek a new car too, from online websites to local garages and dealers such as Ridgeway.

Essential Extras

Insurance is a legal obligation for all vehicles and can be costly for new drivers, sometimes eclipsing the price of your car. Road tax is also a legal charge although it costs a lot less than insurance. It is now based on the car’s CO2 emissions so depending on your chosen vehicle it can be absolutely nothing.

Unless you lease your new vehicle you’ll have to pay for servicing and maintenance costs as well. An annual MOT is required and while older cars may be cheaper the costs of repairs could be more frequent.

Running Costs

The rising price of fuel (both petrol and diesel) means running a car, whether you’ve bought or leased it, are significant. These should be worked into your budget to see if you can afford to run a car or will need further financial help.

When purchasing a new car it is therefore worth checking how many miles per gallon it will do, as buying a more expensive one with better fuel efficiency could work out cheaper. Other smaller aspects such as getting your car washed, changing the air fresheners and more will apply to every model of vehicle.

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