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How much does a first car cost?

  • 4, Feb 2022
  • Read time: 5 mins
Buying your first car can be an exciting time; a car gives you more freedom and flexibility to get around. You may know some of your first car costs, such as the car itself, insurance and petrol but it’s easy to forget some expenses. This complete guide will help you understand budgeting for your first car and avoid any nasty surprises.
Woman doing paperwork.

Insurance can be expensive for new drivers

One of the main factors to determine the price of car insurance is age and experience. The longer you drive and build up your no claim discount or bonus, the lower your premiums will be. If you’re aged 17-24 you can buy our young driver insurance called SMART WHEELS, where we install a black box to help you drive safely. The safer you drive, the bigger the discount you can earn off your renewal.

How to lower car costs:

Buy a more fuel-efficient car

The car you drive will affect your car insurance price. High performance sports cars with large engines are more expensive to insure when compared to a small 1-litre engine vehicle. Our guide to car groups could help you when choosing a car.

Decide how much excess to pay

Choosing a higher voluntary excess may help lower your premium. But, be mindful when choosing your excess that you can afford to pay it, should you need to make a claim.

Annual versus monthly payment

There are two ways to pay for your car insurance: monthly or a single annual payment. Choose an option that works for you and your budget. Paying monthly can help if you do not have a lump sum for your cover. However, single payment or annual payment will not include interest (APR) charges.

Get your mileage right

Drivers with higher mileage have higher car insurance premiums. We advise that you are always honest about the miles you drive because underestimating can invalidate your car insurance.

Car tax is something you should check before buying a car

Car tax is officially known as the Vehicle Excise Duty or VED. For cars first registered between 1 March 2001 and 1 April 2017, car tax is based on carbon dioxide (CO2) emissions; this will be shown on your V5C registration document.

Generally the newer and more fuel-efficient the car the lower your car tax bill. For cars registered before 1 March 2001, car tax will be based on the engine size. Find out what your car’s tax would be on the GOV.UK website.

Owning a car means regularly budgeting for these items


Cars run on fuel either: petrol, diesel or electric. This is the most frequent car cost. There are ways to reduce your fuel bill, from engine size, ensuring tyre pressure is correct, removing excess weight in the car including, roof racks and boxes. Using additives like antifreeze when necessary will help keep your engine healthy.


Tyres are a big expense and it’s important to get as many miles as you can out of them. Check the tread depth when buying a used car to see how many miles they have left (UK law states a minimum tread depth of 1.6mm). As a general rule, you can expect to get around 20,000 miles from your front tyres and double that for the rear. Driving smoothly and checking your tyre pressure regularly will help maintain fuel efficiency.


MOT checks ensure your car meets minimum road safety and environmental standards. Cars over the age of 3 years will need an annual MOT. This is a legal requirement to remain on the road.

Servicing and repairs

Regular servicing is vital to maintain your car and help keep it on the road. You need to service your car each year or every 10,000 miles, whatever comes first. A top tip is to ask friends and family to recommend a good garage for car repairs and servicing.

Other costs to consider, include:

  • Budgeting for the right breakdown cover
  • Light bulbs for head and brake lights, window wipers
  • Timing belt needs to be replaced regularly
  • Screen wash, coolant and oil top-ups
  • Washing your car, ensuring paintwork is looked after avoiding rust

Make sure you compare car deals

Most people remember their first car with fond memories and it’s important to choose the right one that suits your needs. There are a few options whether buying a new car, used car or leasing a car. New cars are often more fuel-efficient and don’t have some of the costs mentioned in this guide, such as MOT costs for the first three years of ownership but soon depreciate in value over time.

Used cars are often cheaper to buy, however, it’s important to check costs such as car tax, servicing and maintenance because these might still make ownership expensive overall. Leasing a car can help covers some of the costs. Usually, if there any maintenance issues these will be picked up by the car dealership. But, just like the previous two options, how affordable this will be over time will depend on the deal you make with the leasing company.

Create a budget plan of everything you pay

Creating a budget is a really useful financial tool to help keep you on track of your expenses. Owning a car is a substantial expense. That's why it's useful to set aside money each month to cover any costs that may help you avoid any unexpected surprises.

Check out SMART WHEELS young driver’s insurance. It’s the smart way to fast-forward your driving style.

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