Running a car in a capital city costs more than the monthly finance payment. If you are working out how to budget for a car in London, it helps to split the costs into three parts: what you owe each month, what you spend on fuel or charging, and what the city itself charges you to drive and park. For journeys where owning is not the only option, it is also worth weighing against hiring a car in London.
Your current payments
When you are adding any major bill to your income it’s important you budget effectively for it.
Think about your current bills, any current debt you have to pay, and any commitments you might have that impact you financially. This will help you to have a clearer idea of your finances and what you can afford.
Calculating your car payments
Calculating your monthly car payments isn’t as difficult as some people think. You can use a car finance calculator to work out your payments to the finance company before you make an official application.
This will help you to work out what you can afford and how long you need to pay it over.
Your payments are calculated using your deposit amount, the amount you are looking to borrow, and the loan term. Some calculators ask for your general credit rating (poor, good etc) in order to determine how much interest you could pay.
Charging and fuel
You should also budget for your charging or fuel.
If you drive a petrol or diesel vehicle, consider:
- Your daily commute
- Weekend travel
- School runs and family journeys
If you’re considering an electric vehicle, factor in:
- Home charging costs
- Public charging costs
- Workplace charging options
If you are considering getting an EV, there are some government grants you can apply for to help you pay for at home charging.
London charges
With London being one of the busiest cities in the world, parking can be costly. This is why you should budget for any reoccurring parking costs you may have to pay, this could include:
- Private parking spaces
- Workplace parking
- Pay and display
Generally, you should be able to find this information out either from word of mouth or online. This will help you breakdown regular car costs.
You may also be subject to ULEZ charges. If your vehicle does not meet Ultra Low Emission Zone (ULEZ) standards, you may face daily charges when driving within the zone.
If you are entering central London, you might also need to pay the congestion charge. This applies to driving in the central zone at certain times. The charge has operated since 2003, and the daily rate rose to £18 earlier this year.
Final thoughts
It’s important to budget for a car, especially when you’re in a major city. By using a car finance calculator, you can work out the costs of your monthly payments, this will help you to budget efficiently for your car.
There are many things to think about when getting a car, regardless of where you’re located, but by being prepared for your monthly costs you can put money away and make cuts where needed in order to ensure you can comfortably make your payments each month.
