How to Buy a Car

Our simple guide to choosing your next motor, getting the best deal and staying in the driving seat when it comes to your finances. 

Whether you're looking for a nippy city runaround, something with space for the kids bikes and muddy dogs, or an eco friendly electric hatchback, choosing your next motor is only the start. You also need to consider how to pay for it, budgeting for insurance and servicing, as well as fuel costs, warranties, road tax, and other potential charges such as city low emission zones. It can seem daunting before you even set foot in the dealership, but buying a car doesn t have to be challenging.

This helpful step by step guide has all the information you need to give you the confidence to choose the right car, get the best deal, and cover your costs for as long as you own it.

Budget and Finance 

The first step in the car-buying process is working out what car you can afford, and how you plan to pay for it - whether it's with cash you have saved up, a loan*, or car finance. Whether you are going to pay upfront, or monthly over several years, make sure you consider the total cost of ownership, not just the purchase price or monthly payment.

If you are a learner driver, it's important to note that buying your first car can come with higher costs than you might initially expect. In addition to the car purchase price, you will need to budget for road tax, fuel, insurance, and ongoing maintenance. New drivers often face higher insurance premiums, and these costs can quickly add up. So, consider all the expenses, not just the cost of the car itself.

The True Cost of Getting on the Road 

Getting your licence and buying your first car is an exciting milestone, but the costs can add up quickly if you don t plan ahead. Here s what you need to consider before you get behind the wheel.

Driving Lessons

The average cost of driving lessons in the UK typically ranges from £25 to £45 per hour. On average, new drivers need around 45 hours of lessons, which can total approximately £2,025. Prices can vary by location, with some areas being more expensive, and intensive courses can cost more but reduce the overall lesson time.

Pass Plus is a practical training course that takes at least 6 hours and is for drivers to improve their skills and drive more safely.

It can be taken at any time although it should be most useful to new drivers in the year after passing their test.

Driving Theory and Practical Tests

The cost of the driving theory test in the UK is around £23, while the practical test costs approximately £62 on weekdays and £75 on weekends or evenings. It's a good idea to budget for potential retakes and preparation materials like apps, books, and revision tools.

Average Cost of a First Car

The average first car cost in the UK is around £5,000. For new drivers, buying a used car can save money and avoid the steep depreciation that comes with new cars. It's also wise to choose a car in a lower insurance group to help reduce overall costs. 

Car Insurance

The cost of car insurance for new drivers tends to be high, with first year premiums averaging £1,300. The cost can vary depending on factors like your age, location, car model, and claims history. To save on insurance, consider options like black-box (telematics) insurance, adding a named driver, or opting for pay as you go policies. 

Running Costs

Aside from the initial purchase price, new car owners should also budget for ongoing costs:

• Tax: £161 for many first cars
• MOT: £54.85 (UK Gov standard fee)
• Servicing: Starting from £150+
• Fuel: £800-£1,000+ for young drivers

These costs can seem daunting, but planning ahead and budgeting properly can help make them more manageable.

Servicing a car shortly after purchase can help identify any issues that may be covered under the standard three-month warranty. Some dealerships provide extended warranty periods, even for used cars.

Different Ways to Pay for a Car 

Cash

If you've been saving for your car, paying upfront in cash might be an option. But before you spend all your savings at once, you might want to think about keeping some money aside for future expenses like repairs and maintenance.

Loans and Finance

If you don't have enough savings to pay outright, you could consider a bank loan or car finance. Before you take out a loan, check your budget carefully to ensure you can afford the monthly repayments. It's important to understand the total cost of the loan, including any interest, and be aware that interest rates may vary depending on your credit history.

If you're a new driver, you can find more information on affordable car loans and financing options on our Car Loans* page and Car Finance Guide.

Types of Car Finance Explained

Hire Purchase (HP): You pay a deposit and then make monthly payments with interest over a set period, usually three to five years. At the end of the term, you own the car outright.

Personal Contract Purchase (PCP): You only pay for the depreciated value of the car, and at the end of the agreement, you can either pay a balloon payment to own the car, return it, or trade it in for a new one. It's often cheaper upfront than HP but consider the total cost.

Leasing: With leasing, you pay a monthly fee to use the car for a set term (usually 24-48 months), and then return it at the end of the lease. While leasing often has lower monthly payments, you won't own the car and may face extra charges for exceeding mileage or any damage.

Choosing the Right Car 

Your car is likely to be the second biggest purchase you ll ever make, so it s important to choose wisely. Here are some factors to consider:

• How many people do you regularly carry?
• Will you need a large boot for equipment or luggage?
• Will you be driving short local trips or longer journeys?
• Is fuel efficiency important to you?
• Do you need a car that s easy to park or access?
• Is safety a top priority?
• Are you considering a new or used car?

If you are purchasing your first car, you might want to consider choosing a smaller, more affordable model in a lower insurance group (1-3). Popular models for first-time buyers include the VW Up, Toyota Aygo, and Ford Fiesta. These are practical, reliable, and affordable.

Remember, safety is especially important as a new driver. Be sure to check the Euro NCAP safety ratings for any car you're considering.

Test Drives and Inspections 

If you're a first time buyer, it's normal to feel nervous. Don't hesitate to bring along a more experienced driver, like a parent, to help spot any potential issues you might miss. Whether you're test-driving a new or used car, take your time and ensure the car suits your needs. Check for comfort, practicality, and ensure that it fits your parking space.

For used cars, make sure to inspect the condition thoroughly, looking for signs of wear and tear or damage. If you're unsure about the car's condition, consider a mechanical inspection.

The AA has a comprehensive guide to what to look out for on a test drive.

Doing the Deal 

Don't feel pressured to make an instant decision. It's common to negotiate the price, and you may be able to get extras included like a service plan or reduced interest rates on finance.

If you're trading in your old car, consider the "price to change" - what you're paying for the new car minus the trade-in value of your old one.

What's Next?

You've found the perfect car, done a great deal, arranged the finance and got the best deals on all the little extras.

But before you drive away, you need to register the car in your name, pay road tax and arrange your insurance. Here is a handy step-by-step checklist from Gov.uk. It is also a good idea to make a budget, so you can plan for expenses such as servicing and maintenance, to give you peace of mind that you won't have any nasty surprises down the road.

Happy motoring! 

*You must be over 18, or over 21 if you apply online. Lending is subject to approval.

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