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Getting your first car is a milestone moment in your life. Having your own wheels gives you freedom, freeing you from waiting for buses that are always late or relying on others for lifts. It’s also, however, a change in financial responsibility. Not only will you need to pay for the car, but there are several other costs that you’ll need to budget for on a regular basis.
Let’s take a look at the main ones.
Insurance
It’s not enough to just own a car and have a licence; you also have to be insured to drive. Insurance is there to protect both you and others should an accident happen, or if your vehicle is stolen or damaged in some way. Without insurance, you’d have to fork out the money for any repairs or even a new car, should an issue arise. Insurance also offers financial protection for you, as well as your vehicle, offering compensation for common injuries such as whiplash that occur during a crash.
Do I have to be insured?
Insurance is a legal requirement in the UK but can be expensive for new drivers, depending on your age. Make sure to do your research and consider options such as installing a black box to track your driving behaviour to reduce the cost.
Tax
Everyone with a petrol or diesel car pays road tax – electric vehicles (EVs) and hybrids are currently exempt, but this will change in April 2025. This money goes towards the central governmental pot and supports things such as road maintenance and new infrastructure.
How is tax calculated?
This can be done as a yearly or monthly payment. The cost will depend on both the age of your vehicle and the emissions it produces, with cars registered between 1st March 2001 and 31st March 2017 being measured on emissions alone. If you’re able to get a slightly older car that falls into this bracket and has relatively low emissions, you can save money, so make sure to take this into account.
Breakdown cover
Whilst not compulsory, having breakdown cover on your vehicle can be invaluable if you do happen to come to a stop at the side of the road. As a new driver, breaking down can be scary, and you may not feel confident enough to do something like change a tyre yourself.
If I break down, can I take out a policy immediately?
You can’t log on at the side of the road take out a policy and then call the provider – most of them will have a disclaimer that you can’t call roadside assistance for 30 days after the policy starts. If you don’t have cover and you have broken down, you’ll need to pay a callout fee, which can be expensive, so it’s worth considering taking out a policy as part of your regular expenses.
Fuel
Of course, one of the regular expenses that no first-time driver can avoid is fuel. The majority of drivers start in a petrol or diesel car, so you’ll need to fill up and pay as you go.
Fuel prices are constantly changing, so make sure you’re not budgeting for this down to the exact penny. Instead, work out what your common journeys will roughly cost and then come up with a financial plan to ensure that you have enough money each month to pay for your fuel. If you’re looking to build your credit score, it can be a good idea to pay for your fuel on a card and then immediately pay it off from your current account, as this will improve your rating. Just make sure you’re using your credit card responsibly.
Finally, if you’re regularly going out of your way to give your friends a lift now that you’re on the road, you may also want to think about asking them for a petrol money contribution.
Taking the next step
Getting your first car is an exciting time, but as we’ve discussed, there are lots of different costs to consider aside from the actual vehicle. Take your time to think about how you’re going to pay for them, so you can enjoy your time behind the wheel without worrying about bills.
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