How to save for a car (and what it really costs to run)

The purchase is not the cost

Before choosing a price, add up the running costs: insurance, fuel or charging, tax, servicing, tyres, MOT or inspection, breakdown cover, parking, and depreciation. Divide by 12 for the real monthly figure.

Set a total budget, not a monthly payment

Dealers negotiate in monthly payments because it hides the total. Decide the maximum total cost first, then see what finance or savings plan fits.

Cash, loan or PCP

• Cash — cheapest overall, no risk, requires patience. - Loan — you own it; compare the total repayable, not the rate alone. - PCP/lease — lower monthly, but you may own nothing at the end; check mileage limits and final payment.

Model the total cost of each in the debt payoff calculator before signing anything.

Build the savings plan

Target amount divided by months available equals your monthly transfer. If the number is uncomfortable, extend the timeline or lower the target — do not borrow the gap.

Do not forget the running fund

From day one, run a separate car sinking fund for servicing, tyres and insurance. This is what stops a repair going on a credit card. See sinking fund categories.

Track fuel and mileage

If you drive for work or gig platforms, per-mile cost decides whether the job is profitable. MoneyQuilt tracks fuel, mileage and vehicle costs alongside the rest of your money.