Hidden Costs of Buying a Car in the UK: What You Need to Know

On average, a car costs £ 12,000 to £ 32,000 depending on the specifications, size, colour, brand, make, and model. Thus, unless you are sitting on a pile of cash, car financing may help. It will help you buy the car by spreading the costs of instalments.

Whether you buy the car with savings or finance it, the blog may help. It lists the hidden costs you must know before purchasing one. It will help you avoid paying unnecessarily and make sound choices. Moreover, you can budget for such expenses before buying a car through finance or savings. If you plan to buy a car within 6 months, read ahead.

8 hidden costs to know before purchasing a dream car

Buying a car is a significant commitment. While the numberplate and gleaming headlights appeal, costs may catch you off guard. If you plan to purchase a vehicle in the UK, know these expenses.  From insurance to registration, numerous costs increase the final price of owning a car. So, how much money do you have to spend to own a dream car? Let’s know:

1)     Car insurance costs

Car insurance is a necessity in the UK to drive a car legally. Driving on roads without one may attract penalties. Additionally, it may lead to a prison sentence. The cost of insurance is high for new drivers. It is because they lack sufficient experience to prove safe driving. A comprehensive car insurance costs a median of £1037 for young drivers.

Alternatively, experienced drivers can get one at £383. It may prove costly for students seeking car insurance to buy a car. If you saved enough but emergency costs sweep you off savings, external finance may help.

Students with limited credit history or income may benefit from this. Check monthly instalments loans with no credit check facility immediately. It will help you finance the remaining insurance cover costs without delaying further. A loan without deep credit checks keeps your credit score as-is. Later, you can comfortably repay the dues with equal monthly instalments.

2)     Road tax- the biggest expense

Over the years, the car driving costs have increased significantly. The cost of fuel is high, and so are car insurance costs. However, the biggest expense is road tax. The road tax charges depend on the vehicle type, emission, and fuel type.

For example, a vehicle owning a diesel car pays higher road tax than an electric car. Thus, you must know the car road tax liabilities. The current flat road tax rate for 2024/2025 is £190. You may get discounts on electric, hybrids, mild hybrids and plug-in hybrid cars. You can expect to pay £180/year.

3)     Dealership costs

It is costly to finance the car purchase costs through car finance dealerships. It involves fees like dealership, administrative and costs to extend warranties. Here is a detailed description of each:

a)     Administration costs

Dealerships often charge administration fees to cover paperwork. It may include registering the vehicle with DVLA (Driver and Vehicle Licensing Agency). It also involves managing necessary documentation. Depending on the type of dealership, the fee can range from- £50-£500.

b)    Car financing or Dealership fees

If financing the car through a dealership, prepare for additional costs. It may include agreement set-up costs, interest charges, and expertise assistance. This might not be evident when signing a finance agreement.

c)     Extended Warranty

Dealerships offer extended warranties beyond the manufacturer’s warranty. However, it may be relaxing to extend warranties; you pay more. Thus, the decision is made according to the requirements and car usage.

Dealing with administrative and car financing costs may be challenging. If you fall on car finance payments, seek additional assistance. Check and get personal loans for bad credit with direct lenders nearby. Personal loans help you fund the car deposit or repayment requirement. You can get one despite your poor credit history.

4)     Customised number plates

It is one of the most important expenses that you can do without. Running a car legally requires you to have a distinctive number plate. However, you can customise it according to the preferred style. Custom plates may cost £250 for simple combinations to thousands of pounds.

You can shop around the market to spot the best price.  Apart from the number plate, you must pay the DVLA fee. It stands at £80. It is the administrative cost of transferring the registration costs.

5)     Insurance premiums

An insurance application is one thing, but paying constantly to keep the coverage alive is another. The insurance cost may vary according to the driver’s age, history, car model, and the chosen level of coverage.

By taking the initiative to shop around for the best quotes, you can potentially save a specific significant amount. The proactive approach can make you feel more in control of your car. Comparison websites can help you grab a suitable offer.

6)     Maintenance and repair of cars

Owning a car in the UK comes with maintenance and repair. Even simple tasks like changing the tyre or car oil can be expensive. Major costs can cost hundreds and thousands of pounds. It is one of the reasons individuals purchase a car on lease. It helps one avoid the upfront costs of ownership.

Alternatively, the car repair cost can vary. It may differ according to car make, model, and service type. A car cost service may cost £115-£315, depending on the car’s size. Precisely, the bigger the car, the costlier the service.

Apart from repairs, regular or scheduled car servicing is also available. It may cost up to £300 extra. However, delaying the servicing may mean more damage and paying more. Thus, avoid skipping servicing schedules.

7)     Parking fees, charges and security

According to urban planners, “ car owners park their car for 95% of the time.” Think that your car stands there unmoved for a long time. Thus, how and where you park your car is important. For example, if you park your car at home, you don’t encounter much fees.

It is just a one-time investment where you need to have a garage. However, if you want, you can get one for rent too. The cost of renting a garage is higher than constructing it.

Here, you may benefit from a private driveaway. This implies that you can store a car without charge. Do you need additional security cameras to protect the car? Whatever the situation, park your car safely. Choose a place free from rodents and ensure regular maintenance.

8)     Depreciation costs

Depreciation is one of the most significant hidden costs of owning a car. New cars lose up to 30% of their value within a year. Understanding the car’s depreciation rate helps you make informed decisions. However, you can halt the car’s depreciation by:

  • Ensuring regular maintenance and repairs
  • Limiting your car’s mileage
  • Looking after the manufacturer’s guidance to keep the car functional

Precisely, you can restrict the car with regular maintenance and restricting modifications.

Bottom line

If you want to buy a car in the UK, you must know the costs. Driving a new car costs about £18000 on average. However, it is just the initial purchase costs. Other liabilities of car ownership include car insurance cover, license, MOT certificate, repair and maintenance. The blog discusses these in detail. It will help you calculate approx., the costs of car ownership.

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