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Car finance ›
What car can I afford?
Updated: Wednesday, 26 October 2022
How to find a car within your budget
By using our car finance calculator, you will easily start to see the total car value you may be able to afford. It provides a rough guide on what your monthly repayments and contract term could be if you wanted Moneybarn to help finance your vehicle.
However, the reality is that working out what type of car you can afford may mean looking beyond just your monthly repayments. Understanding affordability means looking at other factors involved in the purchase and maintenance of a car as well.
Just because a car is cheaper to buy doesn’t mean it will work out cheaper in the long run. You need to look at every cost to work out whether a car is affordable for you. Not just the cost of the car itself, but also fuel and road tax. Check out our Carflation guide which shows how cost of cars has changed over time.
Costs of buying a car
The first thing to consider is how much you can reasonably spend on the up-front purchase of a car – or, if you’re financing a car, how much you can put down as a deposit. Depending on your circumstances and the type of finance agreement, you may be able to get no deposit car finance. This is where it is important to think about whether you want a new or used car, as this can greatly affect the price. You should also think about what your car will be used for when deciding what car to buy.
If you currently own a car or van, it’s worth checking if you can part-exchange the vehicle, as this can reduce the cost of buying your new vehicle. Even if your current vehicle is no longer drivable, you could earn a fee by selling it for scrappage.
If you’ve chosen to finance a vehicle it’s also really important to reflect honestly on what you can realistically afford as monthly repayments. Trying to overreach with your monthly repayments can land you in trouble later on. The monthly repayments will depend on many factors, usually a longer repayment period will reduce the monthly costs.
If you’re not sure if finance is the best option for you, our guide ‘is car finance worth it?‘ outlines the pros and cons to help you make a decision.
Costs of running a car
You might be able to cover the monthly repayments towards the car itself, but will you be able to afford the running costs of the car? There are two types of cost to consider here: fixed costs and variable costs.
Fixed costs
Fixed costs are charges you will always have to pay, no matter how much you drive the car. These include insurance, road tax, MOT and breakdown cover. The yearly cost of these will typically be a fixed amount, so you can budget to clear them annually or clear them in regular monthly payments which shouldn’t change. The costs may change year on year (apart from road tax) and it’s worth checking that you’re getting the best deal for each of these by shopping around.
Insurance premiums are calculated based on a number of different elements, including personal driving history, vehicle engine size, annual mileage and type of cover. For an in-depth guide on these factors and how to get the most for your money, check out our car insurance explained page.
Variable costs
Variable costs are other costs which could arise based on how much you use the car. For example, fuel, servicing and repair costs.
You can always estimate how much you think variable costs are going to be, but keep in mind that unexpected events can increase these costs. Long journeys or broken parts will always crop up, so plan a bit extra into your thinking.
Despite certain repairs being inevitable, there are things you can do to reduce the variable costs of a car, such as buying a car with good fuel economy, considering the costs and benefits associated with petrol versus diesel fuel, and altering your driving style to be more fuel efficient. The relatively low short-term savings from these decisions can have a big impact on the long-term affordability of a vehicle.
Making sure you budget effectively for both your fixed and variable costs is the true key to understanding affordability. To help you calculate the potential cost of a vehicle, a breakdown of these can be found below:
Fixed Costs
- Cost of vehicle/monthly payments (If leased or purchased on finance)
- Insurance
- Road tax
- MOT
- Breakdown cover
- Depreciation (The decrease in value of a vehicle over time)
Variable Costs
- Servicing
- Repairs
- Fuel
- Maintenance (Including oil change, windscreen fluid, cleaning)
- Parking
- Tolls (When driving on certain routes)
- Fines
Car maintenance costs
One of the main costs which should be considered when buying your next car is maintenance costs. If you choose to buy a used car, you should be prepared to budget for repair and maintenance costs.
To help lower potential maintenance and repair costs, it’s useful to know how to maintain your car. We have a handy car maintenance checklist which outlines what to check on your car at different points in time and mileage intervals.
How to find a car within your budget
By using our car finance calculator, you will easily start to see the total car value you may be able to afford. It provides a rough guide on what your monthly repayments and contract term could be if you wanted Moneybarn to help finance your vehicle.
However, the reality is that working out what type of car you can afford may mean looking beyond just your monthly repayments. Understanding affordability means looking at other factors involved in the purchase and maintenance of a car as well.
Just because a car is cheaper to buy doesn’t mean it will work out cheaper in the long run. You need to look at every cost to work out whether a car is affordable for you. Not just the cost of the car itself, but also fuel and road tax. Check out our Carflation guide which shows how cost of cars has changed over time.
Costs of buying a car
The first thing to consider is how much you can reasonably spend on the up-front purchase of a car – or, if you’re financing a car, how much you can put down as a deposit. Depending on your circumstances and the type of finance agreement, you may be able to get no deposit car finance. This is where it is important to think about whether you want a new or used car, as this can greatly affect the price. You should also think about what your car will be used for when deciding what car to buy.
If you currently own a car or van, it’s worth checking if you can part-exchange the vehicle, as this can reduce the cost of buying your new vehicle. Even if your current vehicle is no longer drivable, you could earn a fee by selling it for scrappage.
If you’ve chosen to finance a vehicle it’s also really important to reflect honestly on what you can realistically afford as monthly repayments. Trying to overreach with your monthly repayments can land you in trouble later on. The monthly repayments will depend on many factors, usually a longer repayment period will reduce the monthly costs.
If you’re not sure if finance is the best option for you, our guide ‘is car finance worth it?‘ outlines the pros and cons to help you make a decision.
Costs of running a car
You might be able to cover the monthly repayments towards the car itself, but will you be able to afford the running costs of the car? There are two types of cost to consider here: fixed costs and variable costs.
Fixed costs
Fixed costs are charges you will always have to pay, no matter how much you drive the car. These include insurance, road tax, MOT and breakdown cover. The yearly cost of these will typically be a fixed amount, so you can budget to clear them annually or clear them in regular monthly payments which shouldn’t change. The costs may change year on year (apart from road tax) and it’s worth checking that you’re getting the best deal for each of these by shopping around.
Insurance premiums are calculated based on a number of different elements, including personal driving history, vehicle engine size, annual mileage and type of cover. For an in-depth guide on these factors and how to get the most for your money, check out our car insurance explained page.
Variable costs
Variable costs are other costs which could arise based on how much you use the car. For example, fuel, servicing and repair costs.
You can always estimate how much you think variable costs are going to be, but keep in mind that unexpected events can increase these costs. Long journeys or broken parts will always crop up, so plan a bit extra into your thinking.
Despite certain repairs being inevitable, there are things you can do to reduce the variable costs of a car, such as buying a car with good fuel economy, considering the costs and benefits associated with petrol versus diesel fuel, and altering your driving style to be more fuel efficient. The relatively low short-term savings from these decisions can have a big impact on the long-term affordability of a vehicle.
Making sure you budget effectively for both your fixed and variable costs is the true key to understanding affordability. To help you calculate the potential cost of a vehicle, a breakdown of these can be found below:
Fixed Costs
- Cost of vehicle/monthly payments (If leased or purchased on finance)
- Insurance
- Road tax
- MOT
- Breakdown cover
- Depreciation (The decrease in value of a vehicle over time)
Variable Costs
- Servicing
- Repairs
- Fuel
- Maintenance (Including oil change, windscreen fluid, cleaning)
- Parking
- Tolls (When driving on certain routes)
- Fines
Car maintenance costs
One of the main costs which should be considered when buying your next car is maintenance costs. If you choose to buy a used car, you should be prepared to budget for repair and maintenance costs.
To help lower potential maintenance and repair costs, it’s useful to know how to maintain your car. We have a handy car maintenance checklist which outlines what to check on your car at different points in time and mileage intervals.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
