Churchill magazine

Setting a budget before buying a used car

Updated on: 27 April 2021

Before you go looking for a car, make sure you know your budget.

Is it time to pick up your piggy bank and shake out the silver to find out what your used car budget really is? Because if you don’t know how much you can afford from the get-go, it could all end in tears.

Ideally you need to calculate a sum which not only goes towards the purchase, but also a weekly allowance that means you can afford to run the car.

Get calculating

  • How much do you want to spend?

  • How much do you have saved?

  • If there is a shortfall, then think again, or borrow.

  • If there is a surplus, this can go towards your running costs.

Once you've decided to spend a certain amount on the car, write it down in ink.

A problem when buying a car is that you can get carried away and end up spending more than you budgeted for. It could be a persuasive salesperson or your own weakness when your heart overrules your head.

If you need to borrow

Compare any finance arrangement fees and penalties that could be imposed for any reason, including settling early.

The golden rule is to borrow the least amount over the shortest period, and always find out what the total cost of the loan will be at the end of the repayment period. 

Running costs

You must never forget about these. Just standing still your car will be costing you money in fixed costs that you'll have to pay.


This could be something that a car dealer will be happy to organise, at a price! It’s easy to organise online.


Estimate your annual mileage, then find the overall fuel consumption figure for your future car online or in a magazine.

Divide the annual mileage by the fuel consumption figure, then multiply by the cost of fuel. You can then divide this figure by 12 or 52 to arrive at a monthly or weekly figure.


Phone up a garage and ask what an annual service will cost. At some point you'll have interim repairs and costs like the odd tyre, so allow for that too.

Road tax

Don’t forget that you need to pay for road tax, although there are some exceptions.


Unless you buy a banger for a few hundred pounds, a car will fall in value every single month.

Some car magazines publish these figures, but the simplest way is to look in a value guide and see how much the selling price of the model has fallen. It may not affect you when you buy, but the value of your car will be important when you come to sell it and buy a new one.

Once you have all these figures you can now estimate whether you can afford not to just buy the car you want, but also run it on a day-to-day basis.

Whatever car you go for, check out Churchill car insurance.

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