Things to consider before buying a car

Many of us tend to forget the running costs and concentrate more on the purchase price when looking into a buying a car. The ongoing costs can turn out to be quite expensive.

Running Costs

The running costs can include

  • Fuel. This is generally one of the main costs, particularly if you do a lot of mileage.
  • Servicing and repairs.
  • MOT certificate (an annual test of car safety, aspects and exhaust emissions which are applicable to most vehicles over three years old in the United Kingdom if they are used on public roads).

Insurance

  • It is a legal requirement to have insurance when driving a car in the United Kingdom.
  • The absolute minimum is third party cover which covers damage only to the other vehicle or its occupants if you are liable in an accident.
  • Fully comprehensive cover covers you against accidental damage to your car, and usually other things such as personal accident and injury to you and passengers, windscreen damage, personal effects stolen from the car, etc.
  • Compulsory excess is payable if you make an insurance claim. You will have to pay a first stated amount (e.g. £100) towards the damage or loss.

You will receive a notice to pay each year, and you can pay at a post office by producing the notice to pay, a current insurance certificate, and a current MOT certificate (if the car is more than three years old).

This refers to the gradual decrease in value of the car over time. A new car immediately depreciates by about 20% as soon as it is driven out of the showroom, 40% after the first year, and 60% over the next 3 years.
Oher Costs

  • Prices of spare parts.
  • Security and safety of the car.
  • Parking permit.
  • Loan interest (if buying on credit). See the section below on interest and financing options.
  • Breakdown cover. This is a type of insurance which covers you for mechanical breakdowns on the road or at your home.

New or Second-Hand?

Advantages of a new car

  • No need for a mechanical inspection, since they should come with a warranty.
  • Have the latest technology, safety features, good fuel consumption and environmental performance.
  • They do not need an MOT certificate for the first three years.

Disadvantages of a new car

  • They depreciate immediately when you drive them out of the showroom.
  • Expensive extras for additional features are often added at the point of sale.

Advantages of second hand cars

  • Second hand cards are much cheaper.
  • They often have much lower depreciation profiles than new cars.

Disadvantage of second hand cars

  • They need a MOT if more than three years old.
  • Maintenance costs are likely to be higher.
  • The car needs mechanical inspection – which may be charged.

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