Cars are among the most useful things you can own, but they also account for some of the biggest expenses a household will face. There are, however, a number of steps you can take to cut the cost of car ownership significantly. Obviously, these will not completely eliminate expense, but they will often make it significantly more manageable.
The Initial Purchase
Buying a car is a big outlay, and usually the biggest single expense associated with car ownership. You can significantly reduce the cost by buying second-hand, and this may not be as different from buying a brand new car as you think. Cars depreciate in value fast, especially in the first three years of their lifetime. Even buying a very “young” car in great condition with only a small number of miles on the clock will be much cheaper than buying a brand new one.
If you envisage selling the car on in the future, you can also save money in the long run by choosing a car that is likely to depreciate less. When you come to sell, this will allow you to get back a bigger portion of your initial outlay. This is sadly very hard to judge accurately, but cars with a reputation for fuel economy, newer models, and cars which have a reputation for being particularly stylish tend to hold their value better.
Another popular way to reduce the cost of the purchase is to buy the car on finance. Strictly speaking, this will actually increase the purchase cost of the car, but it will spread the cost out and make it far more manageable. You may be better off seeking external finance rather than just accepting the dealer’s offer. Car finance deals are essentially just secured loans such as the ones on offer from Evolution Money, which use the car as security. By seeking out specialist car loans or other types of finance from an external provider to fund your purchase, you may be able to get a better rate.
Sadly, running costs are probably the expense you can do the least about. The biggest difference you can make comes at the point of purchase. If you are concerned about running costs, make this one of your main considerations and try to find the best fuel economy you can within your budget.
Diesel cars are usually cheaper to run than petrol cars, but they also tend to be more expensive. If you are doing a lot of driving, then the fuel savings will likely balance out the higher purchase price. But if you are only doing a relatively small amount of driving, then you are probably better off choosing a petrol car. However, the purchase price difference can potentially be much smaller when buying second-hand, so look at each car on its own merits.
Since petrol prices vary from area to area as well as over time, it can be possible to make small but noticeable savings by taking advantage of lower prices. If you are visiting an area where petrol seems to be cheaper, take the opportunity to fill up. If prices are about to increase, fill up a petrol can or two as well as your car’s tank so you can take advantage of the lower price for longer.
Insurance is the third major expense associated with a car. If you are a new driver, it could very well be the biggest expense of all. There are, however, a few things you can do to keep the cost down.
Always shop around for the best price, making full use of comparison sites. Never automatically renew with your current provider, as the market changes all the time and someone else may have become cheaper since you last bought insurance. This is especially true because many companies use their best deals specifically to attract new customers.
Paying for a year’s insurance upfront is cheaper than paying monthly. If you can’t afford to do this, you may wish to investigate whether credit from a third-party provider could cover the cost of buying upfront and offer a more affordable rate than paying your provider monthly. A credit card with a 0% rate is ideal if you are able to qualify for one.
If you are a new driver, consider adding your parents or other relatives as named drivers. Having the name of a more experienced driver on the policy often lowers the risk level in the insurer’s eyes and therefore lowers the cost.