Setting your budgetIt’s crucial to choose a car which fulfils your needs, but doesn’t leave you out of pocket.

Often the best way to work out if you can afford a car is to think of its cost per month.

Once you have found an example of a car you are interested in, add together the following figures:

• Divide the price of the car by the number of months you will be paying for it (if you’re taking out a loan or finance)
• The cost of insurance per month
• The cost of road tax – including the higher first year rate – per month
• The cost of your expected fuel usage per month
• The cost of expected maintenance per month (include servicing and replacement tyres)

If you’re taking out finance, there’s plenty you can do to get lower payments:
• Shop around for personal loans – you could get more money and pay less for it
• Push the dealer hard for a better deal on finance (and try and haggle more money off the car’s price)
• Consider a Personal Contract Purchase (PCP)

The value of your current car could also have a big affect on your budget. Getting a car valuation can tell you how much your old car is worth, whether you’re selling privately or trading-in your car as a part-exchange.

If all this is more than you can afford, search for the same model with a smaller engine, as this will usually reduce tax, fuel, insurance and maintenance costs.

How Auto Trader can help:
Car valuation
Understanding car loans and finance