Jan 032018
 

Key things every driver should budget for

Keeping a car on the road can cost drivers thousands each year, so along with safety and reliability, running costs are often a top consideration for many when choosing a car.

Warranty Direct has put together its guide on the most expensive outgoings that come with owning a car and how to keep them as low as possible…

Begin with your insurance

In the UK, it is illegal to drive without insurance and if get caught you could face an unlimited fine and disqualification from driving.

Prices for car insurance can vary massively with insurance companies basing prices on different risk factors. Not all factors can be changed, but there are things you can do to help keep premiums down:

  • Keep the vehicle in a secure location
  • Add an experienced driver to your policy
  • Watch your annual mileage (more miles = higher insurance as there is greater chance of an incident)

Comparing quotes from different insurers could end up saving you hundreds a year, so make sure you shop around to get the best possible deal.

Invest in an insured warranty provider

Taking out a warranty is the best way for someone on a budget to monitor their expenditure when it comes to cars.

There is nothing worse than paying out for an unexpected hefty repair bill if something goes wrong. With an extended warranty* this stress is removed should the worst happen, as a warranty can help contribute all or some of the costs associated with getting new parts and paying for the repair labour.

A fixed monthly cost that can be worked into your monthly budget will be more cost-effective than paying out for one large bill per repair.

Shop around for fuel

Saving just 5p a litre on the price of petrol or diesel could save £100 a year for the average driver.

Pump prices vary around the country and there are even different forecourts in the same town – so it pays to get to know the cheapest in your area.

Motorway fuel stations tend to be more expensive, so if you are planning a long journey it’s worth filling up beforehand to avoid potentially paying £8 a tank more.

Supermarkets will often give you a discount at their petrol pumps when you spend a minimum amount in store, so kill two birds with one stone and fill up after doing your weekly shop.

Efficiency is essential

Eco-driving saves an average of 15% in fuel costs, so small everyday things to improve your fuel efficiency can have a big impact.

Drive smoothly and change gear as soon as possible without revving the engine too much – ideally before 2,500 revs in a petrol car and 2,000 in a diesel. You should also change to a lower gear when the engine speed drops below 1500 rpm.

Stick to 70mph on the motorway. By travelling at 80–85mph, fuel costs can increase by 25% or more – (oh, and it’s illegal too!)

Essential car maintenance

The average cost of maintenance on a used car is £472 a year. However, through regular upkeep you may be able to reduce these costs and keep your car on the road for extra miles too.

Here is Warranty Direct’s top do-it-yourself maintenance tips:

  • Check and change the oil every 5,000 miles or every six months, whichever comes first
  • Check fluids – keeping coolant, brake, power-steering and transmission fluids topped up is essential to safety and extended engine life
  • Check tyre pressure – correct pressure improves your car’s safety, fuel efficiency and makes them last longer
  • Change the filters – it’s an inexpensive, quick fix which prolongs engine life, increases efficiency and reduces emissions

Warranty Cover is arranged and administered by BNP Paribas Cardif Limited. Warranty Direct is a trading style of BNP Paribas Cardif Limited. BNP Paribas Cardif Limited is a company, registered in England and Wales No. 3233010 at Pinnacle House, A1 Barnet Way, Borehamwood, Herts, WD6 2XX and is authorised and regulated by the Financial Conduct Authority, Register No.309075

Sep 282017
 

Car finance schemes can be a major source of profit for businesses, due to the APR added – so almost every dealer, car broker or car supermarket offers a variety of finance options for consumers.

Thanks to low-interest deals and a growing credit industry, finance deals can be a great way to get a better quality used car in a more affordable manner.

However, there are a few key things to be aware of before committing to any deals…

 

Hire purchase (HP)

This is perhaps the simplest type of car finance plan. After paying a deposit of around 10 percent of the car’s value, you hire your car with the option to buy it by the end of a 12-60-month contract. Hire purchase is arranged by the car dealer, but brokers also offer this service. The rates are often very competitive for new cars, but less so for used cars due to a higher rate of APR.

This option is often best for those with a good credit rating, as this means you’ll get hire purchase deals at the lowest interest rates.

Drawbacks include potential repossession if you miss a payment and it can sometimes be more expensive than an independent bank loan.

Personal contract purchase (PCP)

Based on a ‘minimum guaranteed future value’ for the car, this involves paying a deposit, then low monthly instalments over a fixed period. At the end, you can either pay a lump sum to purchase the car outright or return the vehicle.

It’s important to stick to agreed mileage limits to avoid costly penalties of up to 30p per mile – so if you are doing a lot of miles, this option may not be for you.

PCP financing on used cars rarely offers the same incentives as new cars as they are not as lucrative for manufacturers. However, it’s worth keeping an eye out for used-car sales events as some may offer the option of a deposit contribution.

Personal loan

You may consider a personal loan if you have a strong credit rating, as this could work out cheaper in the long term than a finance scheme. There may be a higher APR, but this could be offset by lack of deposit and spreading the loan over a period of your choice. You will also own the car from the outset.

Check the APR between the different payment plans you’re offered and compare it to the rate charged on a personal loan to see what would be the best overall value.

Check the small print

Whichever method you choose, you’ll need to be certain you can afford the repayments throughout the agreement, even if your circumstances change. While some deals give the option of ending the contract early, there can be significant fees for doing so.

You could also buy a used car that has outstanding finance on it, without realising. If it does, the finance company that paid for it will have a vested interest and could reclaim the money or the vehicle from you.

For this reason, it’s advisable to get an HPI check on any used vehicle before you buy it. This is a check of the vehicle’s history that will uncover any outstanding finance on it, protecting you against this potential pitfall.

GAP insurance

If you’re buying a used car on finance it’s worth investing in GAP insurance. This covers the ‘gap’ between the current market value of your car and the value of your outstanding loan or the cost of replacing your car, should it get stolen or written off. However, it is worth bearing in mind that some providers, such as Warranty Direct, are unable to accept leased vehicles on GAP insurance.