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Buying your first car

O2 Drive

Buying your first car: the new driver handbook

Just passed your driving test? Good work. Now for the fun part – choosing your first car. There’s a lot to think about though, so don’t rush into anything. Take your time, follow our five step guide and your money could go a lot further. 

1. Choose new or used

The newer the car, the more likely it is to have up-to-date safety features, as well as nifty little extras like USB charging sockets and Bluetooth stereos.

Most car manufacturers offer finance deals, where you pay a set monthly rate for a brand new car. You’ll either trade it in at the end of the set term, or pay the balance and own it outright.

There are usually some limits – like how many miles you can drive. It's a bit like a mobile phone contract.

Then again, cars lose their value almost instantly – in three years’ time your brand new car will be worth around 40% less than the showroom price. And if you don't want to get tied down with a finance deal, buying a second-hand car outright might be a better option for you.

2. Calculate your running costs

You've found the car of your dreams and, surprisingly, it's just within budget. Before you sign on the dotted line, do a bit of maths and work out how much the car is going to cost you each month. Things like fuel and MOT tests do add up. And remember to think about whether you can afford this along with your rent or mortgage payments and other outgoings.

3. Think about fuel efficiency

For a better budget, work out weekly petrol costs for each option. Use a tool like Google Maps to see how far you travel on regular journeys, add up the weekly total and divide that by the car's official MPG (miles per gallon) to see how much fuel you'll use. Multiply that total by the price per gallon – Which? has a handy litres to gallons converter. That gives you your weekly cost. 

4. Be insurance savvy

First time car insurance can be pricey, because your years on the road and age are taken into account. There’s not much you can do about that, but luckily your experience isn't the only thing insurers think about. You're more likely to find cheap car insurance for first time drivers if you choose a car with a smaller engine.

You can reduce costs with a telematics car insurance policy too. This involves installing a black box, which tells the insurance company how safe your driving is. This can shave pounds off your policy – as long as you drive safely.

5. Play it safe

A car with the latest safety features can also cut the cost of first time driver insurance. When you're considering buying a car, check its position on the Euro NCAP safety ratings. The Euro NCAP looks at cars’ safety features and awards them stars for great performance.

To get real value from your insurance, try O2 Drive Box on Board. As well as giving discounts to safe drivers on renewal, you’ll get driver feedback and safety tips too. And Car Assistant helps you book regular services to keep your car in top shape.