Buying your first car: how to set a budget
Last updated: 19 June 2026
Your first car costs more than its price tag. Learn how to budget for purchase, insurance, fuel, tax and repairs — and avoid first-buyer mistakes.
Think total cost, not sticker price
The purchase price is only the start. A realistic first-car budget includes insurance (often high for new drivers), fuel or charging, tax, maintenance, tyres and a buffer for surprises.
1. Set a hard purchase limit
Decide the maximum you will spend on the car itself and keep some money aside — never spend your entire budget on the purchase and leave nothing for insurance and repairs.
2. Get insurance quotes first
For a new driver, insurance can rival the car's price. Quote a few candidate models before choosing — a small, low-power car is usually far cheaper to insure.
3. Budget for running costs
Estimate annual fuel/charging from your mileage, plus tax and routine servicing. Older cars are cheaper to buy but can cost more to keep running.
4. Keep a repair buffer
Set aside a few hundred for the first wear items — tyres, brakes, battery — which often need attention soon after buying an older car.
5. Choose a sensible first car
Favour a common, simple, reliable model with cheap parts and a low insurance group. Avoid powerful or complex cars as a first purchase — they cost more to insure, fuel and fix.
6. Don't skip the inspection
First-time buyers are the most likely to miss hidden problems. A CarGuard AI inspection and a quick history check are cheap insurance against an expensive mistake.