How to plan your car budget

We all need to plan our monthly budget to keep household bills up-to-date and our financial affairs in order, and this is also the case when planning to buy a car.

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Budgeting for a car is very important because if you don’t get your sums right at the start, you could get into financial trouble. It’s very tempting to buy the most expensive car that you can afford, but remember all the additional costs that are associated with running a car. Before you decide on a specific car, sit down and work out all the running costs for individual makes. You will be surprised how these costs can vary.

Road tax

The higher the CO2 emissions, the more Vehicle Excise Duty you will have to pay. Cars with zero emissions are exempt except those costing more than £40,000, which are subject to six payments of a £310 surcharge fee.

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You need to decide whether to buy a petrol or diesel car. Diesel cars are usually more economical but generally more expensive to buy. Work out how many miles you are expecting to drive over a 12-month period and calculate your annual fuel bill. On average, a car will get 40mpg. An average mileage of 8,000 miles will therefore require 200 gallons of fuel; this will cost around £1050 on average.


Cars travelling a lot of miles per year need an annual service where the oil and filter are replaced; this costs an average of £150. New cars quite often have a fixed servicing plan where you pay up front rather than paying each year. This makes budgeting a little easier.


Car insurance varies drastically based on many factors. The make of the car and engine size, your age and how long you have been driving, and whether you have full no claims or have had accidents in the past are all factors.


Car leasing is another option instead of purchasing outright. Payment plans can be arranged so you will know your monthly outgoings. Companies are available all over the UK, such as vehicle leasing in Leicester at places like

When you have taken all the above into consideration, you will be able to purchase your new car knowing exactly how much it is going to cost and will be able to enjoy driving it.

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