Budgeting For Your First Car

Budgeting for Your First Car - Image Via wikimedia.org

Buying a car is a large financial decision that shouldn’t be taken lightly – but whether you need it to commute to work or simply to run errands, it is also seen as a necessary investment for many.

If you’ve never owned a car before, it can be easy to underestimate the costs. So, here’s our crash course on budgeting for your first motor.

Second-hand or bought on finance?

Budgeting for Your First Car - Mini Cooper -Image Via wikimedia.org

It’s often possible to save up and buy a second-hand car outright, whereas a brand-new car will probably need to be bought in monthly instalments. There are pros and cons in each scenario, and either route can be the correct one depending on your needs.

Buying a new car can give you a little more security that things are going to work as they should, at least for a while. This means that you may end up spending less (or a lot less) on maintenance, and it can also save you a fair amount of hassle. That said, you’ll also be making a long-term financial commitment. A car loan requires a credit check, and will usually mean spending a reasonably large chunk of your budget every month.

On the other hand, buying a second-hand car outright means that it’s yours: you won’t be in debt to anyone. It’s important to make sure that you’re buying something good quality, though. If you don’t know much about cars yourself, see if you can enlist a friend or relative to help when you go to take a look. You’ll also likely lose out on the latest luxury features, although that probably shouldn’t be a deal breaker if you’re working to a budget.

Regular costs

Budgeting for Your First Car - Image Via wikimedia.org

Every car owner needs to budget for tax, insurance and an annual MOT. You should also consider taking out breakdown cover; it’s usually not overly expensive, and you don’t want to wind up stuck on the hard shoulder of a busy motorway without anyone to call for help!

Car insurance can vary significantly depending on factors such as your age and whether you’ve been in accidents in the past. You may wish to compare a number of providers before choosing. Tax will depend on the vehicle that you drive – use this calculator to estimate costs. The current maximum cost that a garage can charge for your annual MOT is £54.85. Note: this is what they can charge simply for carrying out the test. If your MOT identifies necessary repair work, you will have to pay for that as well.

You can also use a calculator like this one to work out what your regular petrol costs are likely to be.


Try to leave some room in your monthly budget for potential maintenance costs. It’s difficult to predict what might go wrong when, and having some money set aside means you won’t need to panic when it inevitably happens. If you have an emergency fund then you could also consider setting some of that aside specifically for car related expenses.

Images Sourced: Wikipedia

About author

Master of the budgets. Provider of the tips. Author and owner of DumbFunded.co.uk.
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