The Economics of Road Usage (the Cost of Owning a Car) Apart from the initial cost of buying a car (including the cost of any finance arrangements), there are three main other costs which you need to take into account when working out your budget (working out if you have enough money). Apart from the initial cost of buying a car (including the cost of any finance arrangements), there are three main other costs which you need to take into account when working out your budget (working out if you have enough money). The three main costs are- The three main costs are- The Standing costs. The Standing costs. The Running costs. The Running costs. The Additional costs. The Additional costs.

The Cost of Owning a Vehicle The standing costs- The standing costs- Driving licence,initial and replacement fee. Driving licence,initial and replacement fee. Vehicle Excise Licence,(road tax),6 months or 12. Vehicle Excise Licence,(road tax),6 months or 12. Insurance,payments by instalments Insurance,payments by instalments Depreciation,the steady decline in the cars resale valve i.e. the older the car gets,the less it is worth. Depreciation,the steady decline in the cars resale valve i.e. the older the car gets,the less it is worth. MOT,each year after the first three years and the cost of preparation i.e the possilbe cost of repairs MOT,each year after the first three years and the cost of preparation i.e the possilbe cost of repairs

The Cost of Owning a Vehicle The running costs- The running costs- Fuel (petrol or diesel) annual mileage. Fuel (petrol or diesel) annual mileage. Sundries e.g. engine oil. Sundries e.g. engine oil. Servicing and repair costs and there frequency i.e. how often.Parts and labour costs,can you do it yourself (DIY). Servicing and repair costs and there frequency i.e. how often.Parts and labour costs,can you do it yourself (DIY). Parts which need regular replacement such as tyres,brake pads,brake shoes and the exhaust system. Parts which need regular replacement such as tyres,brake pads,brake shoes and the exhaust system.

The Cost of Owning a Vehicle Additional costs- Additional costs- The purchase of addition clothing or equipment The purchase of addition clothing or equipment The cost of parking and garaging the vehicle. The cost of parking and garaging the vehicle. How much interest would you have made on your money if you had left the money in the bank,rather than buying a car. How much interest would you have made on your money if you had left the money in the bank,rather than buying a car. Road toll charges,paying to drive on certain roads. Road toll charges,paying to drive on certain roads. Congestion zone charges. Congestion zone charges. Breakdown cover i.e AA or RAC, Green Flag etc. Breakdown cover i.e AA or RAC, Green Flag etc.

Insurance and the Law  To drive your car on the road you must have an insurance policy which is at least `third party cover`- this is the lowest level of car insurance that is permitted in the UK.Third party car insurance will basically protect you against liability to other people. This means that, should you be involved in an accident, your policy would cover you for costs you owe to the third party. Please note,there a limit to how much the policy will pay out for.  Third party, fire and theft, this has the additional cover for your vehicle,i.e you will be protected form costs arising from incidents of fire, theft or vandalism.

Insurance and the Law  Fully comprehensive car insurance is the highest level of cover that you can get, and accordingly is the most extensive. As well as the protection offered by the lower levels of car insurance you will also have protection for things like accidental damage to your own car, windscreen damage, cover for personal possessions left within your car, car audio equipment, medical expenses, new car replacement, and more. Read fully your terms and conditions to see exactly what you are covered for.

Terminology used by Insurance Companies  The policy- this term relates to the insurance schedule, certificate of insurance and document of insurance.  The schedule-states the period of cover, name of the insured, sections of the document of insurance which apply and conditions which vary the terms of the insurance.  Document of insurance – the booklet explaining it all.  Certificate of insurance- proof you have insurance.  The policyholder-you the insured.  Green card- the International Motor Insurance Card, this document is required by some countries as proof of insurance while driving abroad.  Cover note- a temporary certificate of insurance.  Excess- the amount you must pay in the event of an accident.  No-claims discount- a discount from the cost of you insurance (the premium), check the schedule for the number of years no claim discount you may have.  Premium- how much you have to pay for your insurance.

Before Learning to Drive  The minimum age at which you are allowed to drive a car on the roads is 17 (16 if you are disabled and in receipt of a mobility allowance).  Before you start learning to drive you must have a provisional driving licence (application form D1 which is available from the Post Office, cost £21)  Until you pass you driving test,YOU MUST NOT DRIVE ON YOUR OWN,you must be accompanied by someone in the front passenger seat who is over 21 years old and has held a full valid driving licence for at least 3 years.  You must not carry a passenger or ride a bike over 125cc  Your eyesight must meet the minimum standard, you must be able to read a number plate in good daylight, at a distance of 20.5 metres (67 feet). From 2001,new type number plates,20 metres (66 feet).  Display the regulation size L PLATES front and rear.  You must make sure you are insured to drive the vehicle.  You must make sure the vehicle is taxed and that the disc is displayed in the left corner of the windscreen.  You must make sure if the vehicle is over 3 years old,it has a valid MOT CERTIFICATE.

Required Documents  If you intend to drive or keep the vehicle on the public roads, it must display a current road tax disc in the windscreen. To obtain a Vehicle Excise Tax Disc, you will need to complete form V10 at the post office. The post office will what to see a valid MOT CERTIFICATE,VALID INSURANCE CERTIFICATE OR COVER NOTE AND THE VEHILCE REGISTRATION DOCUMENT.  If the vehicle is not on the public road, you must complete form V11 STATUTORY OFF ROAD NOTIFICATION.  If the vehicle is over 3 years old, it must have a current M.O.T CERTIFICATE.  This is issued by an approved garage and is a certificate of road worthiness for your vehicle. The garage will test steering,brakes,lights,electrical equipment, seat belts, exhaust emissions,suspension,conditio n of body work and chassis and general safety of the vehicle.  Insurance-you must a have valid insurance certificate for at least THIRD PARTY COVER, this will only cover you for any costs for damages which has been caused to others or their property by your car.

Required Documents  Driving Licence- You must have a valid, signed driving licence for the category of vehicle you are driving. You must inform the DVLA if you change your name and address.  Vehicle Registration document- this is issued for all motor vehicles used on the roads, it describes the make,model,etc and gives details of the registered keeper. IT DOES NOT PROVE LEGAL ONWERSHIP OF THE VEHICLE. You must notify the DVLA when you buy or sell a vehicle using this document.  Please note-different types of vehicles such as buses or lorries (PSV-Public Service Vehicle,LGV Large Goods Vehicle) require different types of licences to allow you to drive them.  Different types of vehicles also have different MOT AND VED (ROAD TAX) REQUIREMENTS.  For further information please see the DVLA website.  Driving age groups- Moped 16 Motorcycle,car 17,passenger vehicle 21,heavy goods vehicle 21.

Terminology used by Insurance Companies  Renewal notice-reminder letter sent from the insurance company to you, stating when the policy ends (date and time) and the premium if you wish to renew the policy  Indemnity-what the policy covers you against.  Personal liability-what you are responsible for.  Protected bonus-for a extra payment, you can protect your no claims bonus, in the advent of an accident, you do not lose this bonus, however there are conditions.  Underwriters-these are people who identify and calculate the risk of loss from the policyholders (you). This enables them to work out the premium rates (how much the insurance costs you) and write the policies stating what risks are covered, they also act as a safety net should the insurance broker go out of business.  Insurance broker- the people you buy the policy from.

Obtaining Insurance  Their are many factors which effect the cost of insurance, you may have to fill out a insurance proposal form, which will include such questions as-  The vehicle make,performance,engine size,vehicle security,use of vehicle.  Age/experience of driver,driving record,area of residence.type of use and type of cover required.  Your insurance company relies on you giving honest information, if you do not, your policy my be invalid