OK, so you want to buy a car. You have saved up some money and have an old one to trade in. Things are looking good for that BMW you have been thinking of. BUT: there are a whole bunch of stuff that you have probably forgotten all about.
And you shouldn’t.
Because, when push comes to shove, the costs of running a car could be greater than what you initially paid for it over a ten-year period. So, before you splash out a small fortune, make sure you have looked at all the costs, not just the initial one. And you can start your research right here.
Let’s say you have bought a £10K car on finance over five years. You put down a 10% deposit and pay around 10% APR on the rest. That’s an extra £900 a year for five years, or another £4,500. So now your brand new £10K car costs almost 50% extra than it did when you bought it. And the value will have dropped by almost 50% by the time you have paid it off. Which – not to put too fine a point on it – is crazy.
If you have been driving an average car for the past few years, saving fervently for a gas-guzzling upgrade, then you could be in for a shock when your road tax comes in. Your Ford C-Max will cost around £250 a year. But the Porsche Cayenne you now have sat outside on your driveway will cost you around £1100. That’s an extra five and a half thousand over the five-year lifespan of your car. One way of reducing your road tax is to find a car trader that offers you a deal when you buy new. For example, Inchcape Lexus offer you a free year of tax on their new Lexus cars. It could save you more than a thousand pounds from the outset.
Similarly, insurance costs for certain cars are incredibly high. Car insurance comes in 50 different price bands, with 50 being the top. If they are fast, they come with greater risks. Depending on your personal circumstances, that £100,000 Audi R8 you have always lusted after is going to cost you somewhere in the region of £2000 a year. Or an extra £10K for five years. Or an extra 10% on top of your original purchase.
Petrol or diesel, it doesn’t matter. The faster and more powerful your car is, the more it’s going to cost. In fact, some cars can cost you somewhere in the region of £700 a month in petrol, just for using it in a normal way. That’s an astonishing outlay in anybody’s book. And it will add an extra £35,000 to your car costs over five years!
Obviously, these examples are from the top end of the scale. But, even if you slash them in half, you are still looking at a considerable chunk of your wages being used on your car. So, the next time you decide on a new car, make sure that you can deal with the costs that are sure to follow.
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It’s a never ending battle of making your cars better and also trying to be better yourself.