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car-pointerCar finance deals can help with your purchase but don’t forget all the other costs
The RAC calculated in their 'Report on Motoring' of 2012 that the cost of buying, owning and running a family car is on average £6689 per year, or £557 a month. This is a staggering amount but not so surprising when you consider that the car itself is likely to have cost £15,000 or more. On top of this will be the cost of servicing, new tyres, road tax and, of course, insurance. According to the AA, if you have owned a number of cars over the last forty years you will have spent an eye watering £158,835 on buying and running them. Insurance alone can be prohibitively expensive. The average person pays more than £1000 a year, according to the AA, whilst young men between the ages of 17 and 22 pay nearly £3000. Perhaps it should not come as too much of a surprise to learn that I in 5 younger drivers are actually driving without insurance.

Save money by buying an older car

We regard our cars as essential and until public transport becomes at least nearly as convenient as using your own car, it is unlikely than many of us will forfeit our own transport. However, there are cheaper ways of running a car than the RAC describe. For a start, it is always worth buying a second hand car because the value of new cars depreciates so rapidly. It is estimated that nearly all cars will be worth only a third of their original price within three years. A car that is a few years old should still be quite reliable, look good and will cost you a great deal less than it would have new.

Should you go even further and buy a much older car, perhaps one that you can afford to buy from your savings? The obvious advantage here is that you won't be saddled with the cost of a car loan and while interest rates on savings are low, this could be a sensible option. However, do remember that older cars are notoriously unreliable. You could well be making a false economy by buying a cheaper car and it will end up costing you a great deal more in the long run as you have to meet the expensive costs of repairs.

Shop around when financing your car

Having chosen your car, you will need to decide how to finance the purchase. Many garages offer Hire Purchase deals but these are rarely good value unless you are buying a brand new car from them. Car loans are better value but do shop around, comparing APRs. You'll be surprised at the car finance deals out there.

Save on fuel

Once you have bought your car, road taxed and insured it, you will want to get on the road but be aware that if you drive on average 12,000 miles a year, your petrol is likely to be costing you a minimum of £2500 per year. With the cost of fuel being so high, it makes sense to reduce the number of miles you drive. Perhaps when we take the high cost of running a car into account we should be thinking about using public transport more after all!


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