Recently the Bank of England has announced another hike in the base interest rate, to a high of 4.5%. This is the highest rate since before the financial crisis in 2008, and it’s bad news for borrowers.

If you’re looking to finance a new purchase, whether it’s a house or a car, then you’ll end up paying more.

The effect of rising interest rates

Interest rates being higher, you might find it not only more expensive to finance a vehicle but more difficult to find a loan in the first place. You might make the deal work by stretching your borrowing over a longer period, or by putting down more money upfront. But the bottom line is that you’ll be paying more!

Rising car prices

Interest rates aren’t the only factor driving up the cost of motoring. While oil prices might have declined since the high of last year, you’ll still end up paying over the odds at the petrol pump.

But it’s not all bad news, especially if you’re willing to venture into the used market. There’s been a marked slowdown in the price of a used car, which started to kick in early this year after thirty consecutive months of rising prices. The most popular used car in the UK, the Ford Fiesta, even slipped in price by around 2%, year on year.

Other costs associated with cars

So, what other factors might influence the cost of motoring, and what can we do to limit our expenditure?

We can’t do away with the annual MOT test, which is a legal requirement for anyone driving on British roads. What we can do, however, is book the test in the right way. Nowadays, you can arrange an MOT online – which makes life more convenient and less expensive.

If you want to limit your fuel costs, there are a few strategies you might employ. Reducing your speed, braking early and gradually, and making sure that the vehicle isn’t carrying too much excess weight can all be beneficial.

When it comes to maintenance, it’s best to be proactive. Swap your tyres out early, and inflate them regularly. Get your car serviced often. The investment will reduce your maintenance costs in the long term.

While your options might be limited when it comes to finance, it’s still worth shopping around, since some loans might offer more value than others.

Finally, we should consider the possibility of limiting your driving. If there are journeys that you could take on foot, or by bicycle or public transport, then you might find that making the switch is great for your health, as well as your bank balance.