In association with Compare the Market
If you’ve been waiting for driving to become more affordable before investing in your first car, now might be the time to finally get behind the wheel.
According to new research from Compare the Market, car running costs are at a six year low. In fact, the cheapest typical insurance premiums are down by nearly £60 year on year.
That’s great news for new drivers, or those looking to own a car for the first time. But despite these savings, running your own car involves costs that can rack up quickly if you’re not careful.
In this article, we’ll explore what those costs are and easy ways to stop them spiralling out of control.
Do your research
Only you know how much you’re prepared to spend on your first car and what you want a car for. Maybe you need a practical people carrier, or a nippy little runaround? Whatever your motivation, you need to research the sector carefully and read relevant reviews.
If you’re buying a second hand car, read reviews that focus specifically on used cars. If you’re cost-conscious (and who isn’t?), fuel efficiency and reliability are key criteria. With limited funds, your first car purchase is likely to be a compromise, and we’d suggest you prioritise practical features over “nice-to-have” extras like built-in sat nav or a fancy entertainment system.
When you’re researching your ideal car, don’t forget to think about vehicle tax. Different tax rates apply depending on the type of fuel the car burns and its C02 emissions.
It’s an important consideration because vehicle tax rates can range from £20 per year for especially “clean” models to hundreds of pounds for more polluting vehicles. The government has a guide to how much you’ll pay in each tax band.
After the purchase price of the car, insurance costs are the biggest expense and, unlike the purchase price, they’re an ongoing outlay. The first thing to do as you research your car is check its insurance group – check out Compare the Market’s handy tool for this.
It’s important, because while there are lots of other factors to take into consideration, some models offer lower premiums, on average, than others.
When you’ve seen a car you like, get lots of insurance quotes. There are big differences between what insurers offer and how much you’ll pay, so compare and contrast.
After that, there are various ways to keep premiums low, or at least lower. You can reduce your annual mileage, which you have to estimate when filling out the application form (but you have to be honest, or you risk not being paid out if you make a claim).
There’s often a saving if you can pay your premium in one go rather than in installments, and also if you increase your voluntary excess (your total excess is the amount you have to pay if you make a claim). Be aware that increasing your excess might only amount to a saving if you don’t make a claim.
There are other ways to lower your premium, from fitting better security, to taking an advanced driving course, to adding a second, more experienced, driver to your policy, as long as you genuinely share your car with them (and remember it is illegal to say the other person is the main driver if they aren’t). Compare the Market has a great rundown of them all.
Know what you’re paying for
Many policies have added extras bundled in, like a courtesy car, breakdown cover and motor legal protection. They’re all nice to have, but they’ll add to your premium, so do your research because it could be cheaper to buy the ones you want separately.
Make the first year the worst year
If you’re still faced with a sizable sum, the good news is that, for many drivers, it gets cheaper after your first year.
For example, if you don’t make a claim on your insurance you’ll be rewarded with a no claims discount (NCD) come renewal time. NCD builds up year after year, and can amount to a significant sum. You can reduce your chances of needing to make a claim by driving defensively and obeying the rules of the road.
The same goes for avoiding penalty points on your license. Keeping a clean license will avoid hefty hikes to your insurance premium.
Don’t forget to get new quotes every year, so you’re always on the best deal. Compare the Market’s Good Things Happen hub has a handy tool that will automatically find great deals ahead of renewal time.
Reduce running costs
After finding the best insurance premium, the biggest saving you can make is on the running costs of your car. To put it simply, the more responsible you are as a car owner, the cheaper your costs are likely to be.
For instance, if you keep your car well maintained it will run more efficiently. Check your tyre pressure regularly and before long journeys, because underinflated tyres make your car less fuel efficient. Get your car serviced at least every year.
Your driving style is also important. Driving smoothly, and accelerating and braking gently, uses less fuel and reduces wear and tear on your car. On manual cars, changing gears up early rather than labouring your engine is similarly economical.
And of course, stick to the speed limit. That’s important for your safety and the safety of other road users, and ensures you’ll avoid fines and points on your licence. But it also means you’ll drive more economically. Driving at 80mph, for example, can use up to 25% more fuel than driving at 70mph.
Not cheap - but worth it
Having said all this, owning a car isn’t cheap. Insurance, tax, fuel and maintenance are ongoing costs that require careful budgeting.
But we buy cars because we think that ultimately, those costs are worth it. Owning a car means you’re free to go where you want, when you want, and in the way you want. To many of us, that freedom is worth its weight in gold.