Costing your car: Make your budget bang on the money

By Rosie Earl

What do you need to consider when you’re picking a vehicle to make sure it’s not a financial flop?

Whether you’re buying a banger or a beemer, a new car needs budgeting for.

After you’ve splashed out for the vehicle itself, you’re signed up to a financial commitment that will last the life of the car. You could choose to pay using saving, a loan, finance or a credit card, but once you pay, it opens up a whole world of spending. If you’re prepared, it will become just another day-to-day cost, and rather than an expensive nightmare.

The Tax Man Cometh

Road tax is the first financial speed bump you should think about. Generally speaking, the greener your car is, the less road tax you’ll be charged. You can pay your tax annually, six monthly or monthly by direct debit. I pay mine by DD  and it works out at less than £10 per month. This is great because I used to dread tax time rocking around and always had to make sure I didn’t have any other big bills the same month.

Unlike insurance, which we’ll get to later, there’s no real cost implication if you pay monthly instead of as a lump sum. The Vehicle Certification Agency has a great website which will help you work out how much tax you’ll pay based on the make and model of the car you’re getting.


Electric cars are still very expensive, so chances are you’ll be making a choice between a petrol or a diesel. Diesel used to be slightly more expensive than petrol, but gave more miles to the gallon, so if you could afford a diesel, that would be more cost effective long term. However, this was something of a myth, as according to Carbuyer, you’d have to be doing some serious miles - around 12,000 miles a year more - to see the savings.

Tax Tip

Also, until recently, diesel cars were considered to be an environmentally friendly option, and much more fuel efficient than petrol, however in the last few months plans for a ‘toxin tax’ have been released. If you’re planning to buy a diesel, you might want to look into this to avoid getting stung in the future.

Amazing savings

It’s difficult to work out how much you’ll spend a year on fuel because the prices change more than most of us change our socks, but there are a few ways you can keep your costs down. Heavy loads, blasting the air con or the heating, making lots of short journeys and sitting in traffic for extended periods will all waste fuel and see you back in the forecourt sooner than you’d like.

Part of the Service

If you’re buying a new car or a used one from an official dealership, there maybe an option to take out a servicing plan. You pay into a scheme, and you won’t be hit with a servicing cost when the time comes. Opting into one of these schemes has the added bonus that the dealership will remind you when you need to make your appointment. This will usually be annually, however you may need to book them more frequently if you do a lot of miles. About every 10,000 to 12,000 miles is ideal.

Make friends with a mechanic

If you don’t have the option of a servicing scheme, for example if you buy your car privately, or you don’t think monthly payments are best for you, ask around to find a trusted mechanic who won’t create problems for you or overcharge. If your friends don’t have any suggestions, you can go to to see who other customers recommend.

Pro Tip - if possible, get your MOT done at the same time as your service. It’s less likely to fail. Forgotten when your MOT is due? Find out here.

Check online for deals

Insurance is an essential cost when running your car, which means getting the best deal is crucial. Luckily, the internet is full of price comparison sites that can help you find wallet-friendly deals. It is definitely worth shopping around because quotes can vary widely, from a few hundred pounds to £1,500+.

Compare the Market, GoCompare and are a few of the most popular ones at the moment. The sites are free to use, so why not compare the comparison sites, and find yourself the cheapest deal.

Pro tips

Often, you will get the best deal as a new customer, so make sure you compare every time your insurance comes up for renewal, as you may find you aren’t being rewarded for loyalty.

Ask about deals that may only be available when you call, for example, Admiral, Elephant and Diamond offer a no-claims booster, where you pay for 10 months insurance but get one year’s no claims at the end. This is great for new drivers.

Aviva has an app that measures how safe you are at driving, and this can reduce your premium if you take out a policy with them.  

Top Takeaway

- Pay your car tax monthly to avoid worrying about an annual bill

- Consider how you can reduce your fuel consumption during journeys by unpacking unnecessary items or avoiding short journeys

- Find a trustworthy mechanic who won’t overcharge you

- Shop around for car insurance every time your policy is up for renewal to bag the best deal


Author bio: Rosie is a massive geek who loves anything Hello Kitty or penguin related. She writes every day and wants to be Caitlin Moran when she grows up. If she was an animal, she would be a baby dragon (with a solid background in finance). The Sorting Hat would have put her in Hufflepuff, and she is cool with that.

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