Buying a new vehicle can be rather overwhelming - there are so many different things to consider! Not to mention the fact that you’ll probably be spending quite a lot of money, so don’t want to make the wrong decision.
And when it comes to price, there is more than just the initial cost of the car to think about - you also need to look into things like the insurance and road tax costs, as well as how expensive it would be to repair and service your vehicle later down the line.
To help you get started, we’ve explored a few of the elements that make a car cost effective below!
1. Purchase Price
The first thing you’ll need to consider when buying an inexpensive vehicle is how much the initial purchase price will set you back. Obviously a newer model is likely to cost more, as will cars with a big engine or lots of additional features. And even if you have found a make and model that is typically reasonably priced, you’ll then have to compare prices with various dealers.
More eco-friendly vehicles, such as hybrids and electric cars, because of the cost of producing the lithium-ion batteries, are typically more expensive than diesel and petrol cars too. Though as these vehicles become more common, it’s thought that the price will come down.
The purchase price of a car can also vary depending on where it's bought from. You may find that it’s cheaper to buy a vehicle from a few hundred miles away than locally, especially if you live in the London area.
2. Cost of Repairs and Servicing
This one is a little bit more tricky, as you might not know how much a particular make or model of car would cost to repair or service. Manufacturers don’t tend to make the costs of parts public, as if parts that commonly need repairing are expensive, that may put off potential buyers.
Research has been conducted into this though - Servicing Stop carried out a study in 2018 that looked into the repair bills and servicing costs of more than 250,000 vehicles. The results of this study weren’t particularly surprising, but are nonetheless quite interesting.
City cars, such as the popular Peugeot 108, are cheaper to maintain than others, as their parts are very affordable. On the other end of the scale, you have more luxurious vehicles, like the Porsche Boxster, which come with costly parts, repair bills, and servicing fees. Incidentally, the Boxster was found to be one of the least cost effective cars on the market, as it’s made from premium components.
3. Rate of Depreciation
The next thing to consider when buying a new car is its rate of depreciation. Depreciation is essentially how much the value of a vehicle goes down over time. Over the first few years, most new cars lose almost half of their value through depreciation. But this will largely depend on the make and model of the vehicle. For instance, high end sports cars probably won’t lose as much value over time as other types of vehicle. Particular types of classic cars are also good when it comes to depreciation, as they’ll always be in demand.
The rate of depreciation is closely linked to the cost of servicing and repairs. Vehicles that come with expensive parts are generally the sort of car that holds its value for years to come. Cheaper vehicles that are less coveted, on the other hand, start losing their value as soon as you drive them away!
4. Insurance and Road Tax
How much you pay for insurance will generally depend on things like your age, if you’ve been in any recent accidents, and how long you’ve been driving. People don’t always think about the insurance cost when they’re budgeting for a car, but this can be quite a lot of money if you’ve recently passed your driving test or if you’ve had to claim on your insurance recently.
When it comes to road tax, if you have a newer model of car, with fewer emissions, you may be exempt from road tax. Or at the very least, only have to pay a nominal fee each year. This is something to take into account for the long term - you could save money over the years by not having to pay road tax. The criteria for vehicle exemption include:
● A new car worth less than £40,000 and emits 0g/km of CO2
● A car registered between 1 March 2001 and 1 April 2017 that emit less than 100g/km of CO2
● A classic car over 40 years old
In terms of not paying a lot for road tax, this is entirely dependent on CO2 emissions. Hybrids and electric cars therefore tend to fall into this category, along with some types of diesel vehicles.
5. Fuel Prices and Miles Per Gallon
Normally, diesel costs more per gallon than petrol, but a full tank may allow you to travel further. The cheapest type of car, in terms of fuel, is an electric car, but you need to weigh up whether you can afford to buy this type of vehicle in the first place, as they’re typically more expensive!
Before buying a new car, it’s a good idea to check what their miles per gallon figures are, and see how much you can expect to spend on fuel each month. There are even handy fuel cost calculators that you can use.