How to Research Car Expenses Before Making a Purchase
Are you planning to buy a car soon? It’s an exciting and thrilling experience, but before you purchase a vehicle it’s essential to do your research.
By understanding the costs associated with owning a certain car upfront, you will be able to gain insight into how much each of these costs may add up over time.
In this blog, we’ll discuss how to research your car expenses before taking the plunge and buying a vehicle.
So read on for invaluable advice on researching car expenses!
1. Fuel Efficiency
If you’re a job commuter or drive through the city a lot, fuel efficiency will be a major deciding factor for you. Make sure to check the car’s fuel economy rating (MPG). This information is readily available online (check car review sites, manufacturer websites, etc.) or provided by the dealer when viewing a car.
But how much exactly will you be paying for fuel per year?
Here’s a simple formula: (Annual Mileage/MPG)*Fuel Price
Now let’s understand this with an example:
If a car has an MPG of 30 and you use it for 12,000 miles a year where the fuel price is £5 per gallon, your fuel cost would be (12,000/30) X 5 = £2,000 per year.
Use this formula to estimate fuel costs and compare them to other cars. This will help you make an informed decision.
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2. Insurance Costs
Depending on your age, claim history and a few other factors, car insurance can be one of the largest costs associated with owning a car. It’s important to assess insurance options before making a purchase as costs for insurance different vehicles vary widely.
In the UK insurance costs depends on various factors, such as:
Your age: Younger drivers typically pay more for insurance.
Driving history: If you have a clean record, it can help to keep your premiums low.
The make and model of the car: Insurance companies use historical data to calculate the cost of insuring a car, so certain models may attract higher rates than others.
The area you live in: Urban areas are typically more expensive to insure.
Level of coverage: The higher the level of coverage you choose, the more costly your insurance will be.
To get a better idea of what to expect, you can compare insurance quotes from online comparison sites before buying your car. That way, you’ll be able to make an informed decision and get the best deal for your needs.
Also Read: Top Tips for Buying a Car Remotely
3. Road Tax Costs
In the UK, every car owner must pay an annual road tax (also known as Vehicle Excise Duty, or VED). The cost of this tax depends on the car’s CO2 emissions and fuel type. The lower the emissions, the less tax you’ll pay.
Electric Vehicles (EVs) produce zero direct emissions and so are exempt from Vehicle Excise Duty (VED).
Hybrid cars are subject to VED rates depending on their model and can still benefit from lower taxes owing to their lower emissions than petrol or diesel cars.
If you own a high-emission vehicle and are considering making a switch to avoid higher VED rates, then services like Sell My Car can give you an instant valuation and an option to sell your car for cash.
Check the government’s website for more information on road tax rates and to find out how much tax you’ll need to budget for your desired car.
4. ULEZ Charges (if Applicable)
The Ultra Low Emission Zone (ULEZ) is designed to reduce air pollution and encourage drivers to switch to cleaner, more efficient cars.
The ULEZ currently covers all areas within the North and South Circular Roads in London.
Note: The North Circular (A406) and South Circular (A205) roads currently are not in the zone.
If your car does not meet the ULEZ standards, you will have to pay a daily fee of £12.50 when driving within the zone. This means if you drive in the ULEZ for 10 days a month, you will have to pay an extra £125 per month.
If you plan to drive within ULEZ roads, make sure you check whether your car is compliant before buying it, as this will add to your overall car expenses.
The ULEZ zone is expanding to other parts of the UK, so keep an eye out on TfL for the latest updates and information.
5. Total Cost of Ownership (TCO)
TCO Includes all costs associated with owning a car, including but not limited to:
- Purchase price
- Annual fuel cost
- Insurance
- Road tax (per year)
- ULEZ charges and more
The total cost of ownership is the sum of all these costs and serves as a benchmark for how much your car will cost you over the long term.
We hope that this guide has helped you to understand all the costs associated with running and owning a car in the UK so that next time you’re looking to buy a car, you know exactly what it’s going to cost you.
Looking to upgrade your car? Sell your car first!
Discover how much your car is worth! Get the instant offer by entering just two details about your car.
