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Buying and running a car is one of the biggest financial burdens many of us face. While a set of wheels might be a necessity, it’s also incredibly expensive. The cost of car insurance is rising, manufacturers like Renault are considering post-Brexit price hikes and fuel prices aren’t exactly cheap. However, if you want to buy, and run, a car for your home without breaking the bank to do it, there are ways to make it more manageable.
More and more people now use car finance to buy, rather than making a large purchase outright. There are two main types of car finance: hire purchase and personal contract purchase. A hire purchase allows you to hire the car while you’re making payments on it – when the final payment is made the car is yours. A personal contract purchase means that you lease the car, usually for a period of 2-3 years. At that end of that time there are choices: you can either hand the vehicle back for no cost, part exchange for another, or buy the car outright with one last payment. Car finance allows you to manage the cost of buying a car so that you can pay for it in a way that suits you. Want to know more? Watch our video guide.
The best way to keep car insurance costs down is undoubtedly to preserve your no claims bonus/discount. Careful drivers pay less for insurance and a clean record in terms of accidents and damage will help push your premiums down – by up to 75% after five years of claim free driving. Other ways to preserve that discount include avoiding making minor claims and paying an additional premium to ‘protect’ your no claims discount. You can also help cut the cost of car insurance by upping the security on your car, from where it’s parked to fitting devices like an immobiliser. Consider also telematics – which use satellite technology to assess your driving. Your premiums will be lower if this proves you are a safe driver taking low risk routes.
A car is a depreciating asset so the longer you have it, the less it is worth. Issues always seem to arise suddenly with cars but it is often possible to see them coming, or even prevent them. Maintenance and servicing are the easiest ways to make sure that your car isn’t suddenly out of action and in need of costly repairs. Small issues with bodywork or mechanics can be deal with quickly and prevent something more substantial – and expensive – occurring. For example, spotting a chip in your windscreen early and getting it fixed could save you from having to replace the entire glass. Never underestimate the benefits of regular servicing and maintenance. Book your car in for an annual service and read the car manual – how often do you need to schedule tasks like oil change for this particular vehicle and which parts may need to be regularly replaced? If you’re still put off by the costs of servicing then consider the replacement expenses you could face if you don’t look after the vehicle. The Money Advice Service estimates these as engine exchange – £2,575 and cylinder head gasket – £520, for example.
The way that you drive can have an impact on how long your car lasts and how much it costs you. Don’t roar from 0 – 60 as soon as you hit the roads, for example. While your car is designed to help you switch speeds easily, this is when it is at operating temperatures – give it the chance to heat up first to save on wear and tear. Driving smoothly will mean that you cause less impact to brakes and other mechanical parts and making sure that your car has come to a stop before you throw it into reverse lowers impact on gears. Avoid potholes and keep your distance from the vehicle in front to prevent unnecessary damage from minor accidents. Finally, steer when the car is in motion to limit impact on the steering rack. Some of these are obvious, some less so – all will help you preserve the condition of your car for longer.
It may sound odd to encourage less driving when all that resource has been spent on a car. However, reserving your car for essential trips only will ensure that it doesn’t cost more than it should and will keep repair costs down. Invest in family bicycles, start car pooling with those nearby and encourage more walking too. There are financial and fitness benefits all round to getting out of your vehicle and into the fresh air more often.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley
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