Buying your first car

Buying your first car is exciting – finally you can get out on the road in your own set of wheels! There are lots of decisions to make first, though. What kind of car should you buy? Where should you buy it? How much will it cost and how are you going to pay for it? And what about tax and insurance?

To help you get behind the wheel we’ve put together this step-by-step guide to buying your first car, answering all those questions and more.

How much should you pay for a first car?

Deciding how much you should pay for a first car is really a case of how much you can afford. Firstly, if you have money saved up you could use it as a lump sum to put towards a car you’re buying outright, or as a deposit for a finance agreement. 

As to how much you should spend, most experts agree that if you’re buying through a car finance plan or loan your monthly payment shouldn’t be more than more than 15% of your salary. It’s important not to overstretch yourself, because your circumstances could change. 

You also need to think about the cost of fuel, insurance and road tax, which can be a big part of the overall cost of owning a car. More on that in a bit. 

How much will a first car cost?

The cost of cars – new and used – has risen over the past few years, but the good news is that modern cars are better equipped, safer, more practical and generally more fuel-efficient than ever. 

If you want a new car, the cheapest on sale in the UK (as of September 2024) is the Dacia Sandero, which starts from £13,795. With used cars you can pay as much or as little as you like.  The old adage of ‘you get what you pay for’ generally applies, though – newer, low-mileage cars cost more but are likely to be more reliable and come with more of the safety and tech features you want. 

A budget of £2000 should be enough for something solid and sensible, while £5000 will get you something noticeably newer. Push your budget up to £10,000 and you’ll be able to get a car that’s only a few years old and may even have some of its original manufacturer warranty cover  left.

What kind of car should you get for your first car?

Once you know your budget, choosing what car to buy becomes easier. You can also narrow it down by looking at the different types of car available. These include:

• Hatchback
• Saloon
• Estate
• MPV
• SUV
• Convertible or coupe

Small hatchbacks are a common choice for a first car since there are lots available and they generally give you low ownership costs – typical examples include the Fiat 500, Ford Fiesta, Vauxhall Corsa and Volkswagen Polo. This type of car will fit four adults inside but if you’re regularly going to carry lots of adult passengers or bulky items – or you have a big dog – you might be better off with something slightly larger.

A mid-size hatchback such as the Ford Focus or Kia Ceed will give you a bit more interior space without costing too much more, and if you want an even bigger boot you could consider an estate or an MPV (also known as a people carrier). SUVs are hugely popular for their raised driving position and tough looks but they usually cost quite a bit more to buy and run than an equivalent hatchback.

A convertible or coupe is a heart-over-head purchase. But if you don’t mind paying a bit more and practicality isn’t a concern, buying one could be worth it as a feel good way to start your motoring adventure.

Should I buy a manual or automatic as my first car?

Choosing between a manual or automatic as your first car may come down to cost, since automatic cars generally cost more to buy and tend to give inferior fuel economy. Consider, too, that some cars are available only with an automatic gearbox – these include all full (or self-charging) hybrids, plug-in hybrids and electric cars. 

Of course, it also depends on what kind of driving licence you have. An automatic-only licence is self-explanatory, but with a standard licence this gives you the luxury of driving either a manual or automatic. 

What kind of fuel should a first car use?

There are a few things to consider when choosing the fuel type for your first car. If it’s a question of diesel vs petrol, a diesel car is likely to give better fuel economy (mpg) than an equivalent petrol car and it may also cost less to buy. However, many diesel cars have something called a diesel particulate filter (DPF) to reduce emissions and it needs regular high-speed journeys to keep it operating correctly. If you use your car mainly for short, urban journeys the DPF can get clogged and start to cause problems that can end up costing a lot (sometimes more than the car is worth) to put right.

A petrol engine is a better choice for the majority of first drivers since they are generally less complex and can still give great fuel economy as long as you avoid anything really powerful. A hybrid car could also be a good option, while a plug-in hybrid is another option worth considering if you have access to a home or work charger. Likewise, an electric car such as the Renault Zoe or Renault Leaf could make an excellent first car if you have your charging set-up sorted.

What safety features should I look for in a first car?

Safety features are important in any car and certainly something you want to pay particular attention to when searching for your first car. 

There are broadly two types of car safety features  – passive and active. Passive safety features are those designed to reduce the impact of a collision – things like seat belts, crumple zones, airbags and whiplash-lessening head restraints. 

Active safety features are designed to reduce the likelihood of a collision happening in the first place, or the speed it happens at to help reduce any damage or injury. They include things like anti-lock brakes (ABS), stability control, lane departure warning systems, blind spot monitors and semi-autonomous driving assistance features that can steer or brake the car if necessary. 

Every new car sold in the UK since 2004 has had ABS fitted as standard by law, while stability control (also known as ESC, ESP and various other initialisms) has been mandatory since November 2014. Most modern cars have front, side and curtain (window) airbags as standard and many have some kind of radar-based automatic braking system. 

Check the spec of any car you’re considering buying carefully to see what safety features it has. For a general guide to how safe it is, you should be able to find it on the Euro NCAP website – this independent organisation has crash-tested most cars (in a fancy lab!) and gives them an overall safety rating based on a combination of how it performed in these tests and which safety features are fitted to it. 

Understanding car finance for your first car

If you’ve managed to save up enough money to buy a car outright, well done! If not, you’re likely to be borrowing the money either in the form of a bank (or personal) loan or by taking out a finance agreement. You could even buy a car using your credit card. There’s really no ‘best way to pay for a car’ – it varies according to your personal preferences and financial situation.

With a finance agreement it’s worth doing some research so you know what you’re signing up for. There are various different types of car finance to choose from, although the most popular are hire purchase (HP) and personal contract purchase (PCP). Deciding between HP and PCP will come down to how much you want to pay as a deposit, your monthly repayments and whether you plan to own the car.

An alternative to a car finance agreement is to get a bank loan (also known as a personal loan). This means you’ll own the car from the start and pay off the loan, plus interest, over a set period. Another option is personal contract hire (PCH), better known as car leasing. This is essentially a long-term rental agreement, normally for a brand-new car. Car leasing could be a good alternative to car finance if you want a brand-new car, but it pays to work out all the involved costs over the course of the contract before you make a decision.

How much will insurance cost for your first car?

First, the not-so-good news. In general, the cost of car insurance has soared over the past few years due to inflation, higher repair costs and increased car thefts. Car insurance tends to cost even more for first-time drivers, too, since they don’t have a no-claims discount (something you build over years of driving without claiming on your insurance) and only minimal driving experience. 

The not-so-bad news is that there are ways to make your car insurance as affordable as possible. First of all, choose your car wisely. Every car is assigned to a car insurance group from 1 to 50, with cars in group 1 costing least to insure. 

Also, shop around for insurance providers – there are lots of comparison sites that allow you to enter a few details and compare quotes. Adding a named driver, increasing your excess, restricting how many miles you drive or parking your car somewhere secure could also reduce your premium. You could even consider a ‘black box’ policy, where a telematics device is fitted to your car to monitor how and where you drive – ’good’ driving could reduce how much you have to pay.

How much will running costs be for your first car?

As we mentioned, how much a car costs to buy is only one aspect of how much you’ll pay overall to keep it on the road. 

We’ve touched on insurance – the other key costs of running a car to be aware of are:

• Maintenance and repairs
• MOT
• Road tax
• Depreciation

How much will maintenance and repairs cost for your first car?

Maintenance costs for a car include things such as servicing, new tyres and consumables (bits that are expected to wear out over time). The cost of a service varies greatly, but you can expect to pay at least £150 for an annual service and much more for a high-end model. 

Tyres and brake discs/pads need to be replaced regularly and, depending on how many miles you cover, this could be every two years or so. The costs for smaller cars will be less than for larger ones, but will run into hundreds for replacement tyres or brake components on all four wheels. 

The cost of repairs for your first car is impossible to predict. You might never need to pay for any unexpected repairs during the time you own a car. Alternatively, something major could go wrong and it could make more financial sense to buy a replacement car than to replace the part (or parts).

How much will an MOT cost for your first car?

A valid MOT is a legal requirement for all cars more than three years old. This is an annual test by a qualified technician to make sure that your car is roadworthy. If your car fails its MOT you’ll need to pay for any necessary repairs so that it can pass. The cost of the MOT is capped at a maximum of £54.85, but some garages charge less.

How much is road tax for your first car?

‘Road tax’ or ‘car tax’ is another legal requirement for your first car. Its official name is Vehicle Excise Duty (VED) and the cost varies depending on the age of your car and its carbon dioxide (CO2) emissions or, if it was registered (first sold new) before 2001, its engine size.  

Understanding how much car tax you’ll pay can be tricky since the rates have changed over time and the system is pretty complicated. If your car has zero emissions there could be nothing to pay but if you have a gas-guzzler the cost could run into hundreds. 

Our comprehensive guide to car tax has all the details.

Once you get your car the process of paying for road tax is actually quite straightforward – simply enter your registration number and the gov.uk website does the rest for you. 

How much will your first car depreciate?

Depreciation – how much a car’s value drops over time – is something that’s easy to overlook. Most cars depreciate, some more rapidly than others. If you buy a car through a PCP finance agreement the cost of depreciation is effectively ‘baked in’, but if you buy a car outright the total amount you spend over the course of ownership depends on how much (if anything!) it’s worth it when you sell it. That amount is called its residual value and whether you want to bank that money or use it as a part-exchange for your next car it’s affected by many things, including the car’s brand, condition, mileage and even its colour. That bright pink Mini might be so ‘you’ but it’s likely to be worth far less than an identical car in boring old black or silver.

Where to buy your first car

If you’re pondering where to buy your first car you have more choices than ever. There are the  old-school options of popping down to a local showroom or buying one from a private seller/your mate down the pub, but there are now online retailers that allow you to buy a car online and have it delivered to your door. Add in online auction sites and marketplaces such as eBay, Facebook Marketplace and Gumtree and the world is your oyster. 

You should pick the process you’re most comfortable with but, whichever option you choose, it’s vital that you do as much research as possible beforehand about the retailer you’re thinking about buying it from. Check out user reviews, forums and online articles – knowledge is power!

Test driving your first car

Your first car is an expensive purchase so it makes sense to try before you buy. As well as making sure that it will meet your needs, a test drive gives you a better chance of spotting any potential problems with it. 

Most dealers will be happy to let you test drive the car – some will want you to be accompanied while others won’t. Either way, you’re likely to have to sign a disclaimer first and you’ll be covered by the dealer’s insurance. If you’re buying from a private seller the onus is on you to make sure that you’re insured to drive the car. 

Before you get in, take a good look around the car and don’t be afraid to get down low and have a look underneath. Anything loose or damaged – or any major rust – should be a red flag. Once in, make sure you can get comfortable. It takes a while to get used to a different car but if you’re really struggling to get settled or work out the controls it might be worth considering something else. Don’t forget to sit in the back seats (assuming it’s not a two-seater) and have a rummage around the boot. If the car isn’t practical enough for your needs it's best not to be swayed by other factors such as its colour, image or price. 

On the test drive, make sure that the steering and brakes work smoothly. If it’s a manual car try to shift through all the gears, including reverse, and check the clutch functions well. Make sure the stereo is switched off for your drive so that you can listen out for any clunks or rattles but feel free to give it a blast when you’re parked.

Negotiating the price of your first car

Some people love to haggle and others don’t. Depending on where you buy your first car from, you may well be able to negotiate the price but it’s worth remembering that any retailer will already know what their profit margin is and is unlikely to drop below a figure that they have already set. Many won’t negotiate at all (especially online retailers) but you may be able to work something else into the deal such as a free accessory or fuel. 

If you’re buying your first car you probably won’t have a car to use as a part-exchange. If you do, however, this is one of the best ways you can reduce your overall outlay  – by making sure your part-exchange car is in the best condition possible you’ll get the most money for it.

What checks to do before buying your first car

There are plenty of checks that you can make before buying your first car to give you peace of mind. Once you know the car’s registration number you can check its MOT history for free using the government website, which is a quick and easy way to get a general idea of its condition and be sure of how many miles it’s covered. 

You should also:

• Check online reviews for the site or dealer you’re buying it from
• Take a thorough test drive if possible
• Read a variety of online reviews to make sure its the right car for you
• Visit online forums to see what owners think and if there are common issues to be aware of
  
  

As well as these you can pay for an online HPI check, which checks the car’s registration against a database and can tell you whether it's been written off or has any outstanding finance owed on it. Various companies offer these, as well as more advanced history checks – all are easily done online and can cost as little as £10 or so. At Carmoola, we offer a free HPI check through our app when you apply for car finance. That means you can do unlimited checks on a car that catches your eye, from your phone, in a matter of minutes. 

Companies such as the AA and RAC also offer advanced checks that add an inspection of the car in person by a qualified engineer, although these can be relatively costly.