The implications of Brexit are far-reaching, but have you considered what leaving the EU could mean at a grassroots level? New drivers could be severely impacted by the decision to leave and it’s time to consider the implications.
There are a number of things to consider in terms of how new drivers are going to be affected by Brexit, but for the purposes of this article, we’re going to focus on the issues that we think are most pertinent.
Given the ramifications of the democratic vote to leave the EU, more and more people are asking whether insurance premium prices will be affected, if fuel will be pricier and if buying a car will cost even more than it does already. Naturally, both of these issues will seriously affect new drivers and when you couple nervous fledgling road users with an overwhelming sense of confusion as to what life outside of the single market will be like, answers most definitely need to be found!
Life as a new driver
It’s no secret that learning to drive is an expensive endeavor these days. While, in the past, keen 17-year olds could look forward to driving lessons for their birthdays and maybe even a cheap first car, it seems as though tuition costs, coupled with the recent scrappage scheme, have made learning to drive a very pricey pastime. That’s not even where the costs stop!
New drivers are finding that their first insurance premiums are sky-high, to a level that we’ve never seen before. With first premiums generally running into the thousands, it’s becoming almost unfeasible for young drivers to actually get out on the road, if they actually manage to pass their tests at all. No amount of extra qualifications, such as the tried and tested Pass Plus, seem to make enough of a dent to make first time insurance policies affordable and that’s not all. New initiatives that have brought an end to gender-biased premiums are making sure that insurance is just as unaffordable for girls as it is for boys, but there are whispers of a light at the end of the tunnel.
Surprisingly, some experts are predicting that the UK’s exit from the EU could actually spell good news for young drivers, as apparently, insurance premiums could potentially take a hit.
Will Brexit drive down insurance premiums?
When the issue of Brexit and its potential effects on motorists are discussed, one topic is continually brought up and that is insurance premiums. Will they increase, decrease or stay the same? Will young drivers be penalised or finally able to afford their own premiums with nothing more than a Saturday job? Well, if expert opinions are to be believed, there could be a serious price renaissance on the horizon.
The cost of car insurance in the UK is and always has been heavily influenced and impacted by changes in EU law. A perfect example of this is the way that premiums are no longer adjusted, either favourably or not, in accordance with the gender of a potential policyholder. Left to their own devices, UK insurers would have more than likely been happy to offer female drivers competitive rates, on the understanding that they are statistically less likely to be involved in a serious incident, but that has been scrapped, thanks to EU legislation. Without such ‘interference’, it is thought that exceptionally competitive prices are just around the corner.
Without a huge amount of competition, UK insurers will be able to cut costs where they can, in order to offer enticingly attractive premiums and coupled with telematics, new drivers could wind up being those that benefit the most. Fortune really does favour the youthful, eh? It’s not all sunshine and roses, however, as other costs directly linked to keeping a car on the road are not looking to be as cost-effective.
Will fuel be unaffordable?
Technically, this is something of a how long is a piece of string question, as everyone has a different level of income, but the short answer is that fuel is more than likely to get significantly more costly.
Back in the day, a new driver could get to school and back on £5 of fuel, for a whole week, but now? Well, with fuel prices over £1.20 a litre now, any increases are going to severely impact on the running costs of owning a car, but fuel could level out.
Experts are saying that they expect to see a mid to significant rise in the prices of both petrol and diesel, but that these are unlikely to be permanent. One aspect that could have a longer lasting impact is import duty and there is absolutely no way to tell, yet, how much this will equate to. Let’s not forget that travelling in Europe with a car could leave you facing a hefty fuel bill too, as the GBP has fallen significantly against the Euro.
In short, there looks to be no positive news in terms of future fuel costs, so unless new drivers will be content to simply own a car and sit in it, on the drive, only those with enviable pocket money allowances or well-paid weekend jobs will actually be able to hit the road.
What about the price of new cars?
We know that it’s extremely unlikely that new drivers will be in a position to even think about buying brand new cars straight off the forecourt, but just in case they were planning on it, Brexit could halt those plans!
There are a number of reasons why car prices could rise and, sadly, as new vehicles increase in value, so too do used options, as demand for them will necessarily grow, making it something of a seller’s market.
Dealerships are thought to be preparing for potential disruptions to their supply chain operations, with the upshot likely to be a temporary hike in vehicle prices, but import and export duties look set to have a massive impact as well. If the UK still had a flourishing car market, things would be drastically different, but increased reliance on European manufacturers means that once we have left the EU, we are going to have to expect to pay top dollar for any and all non-domestic makes and models of cars.
Is there any good news at all?
Aside from the potential for domestic insurers to leap upon the chance to get a little more competitive, there is a small beacon of hope for new drivers, especially those that will need to buy their own car, post-Brexit. Given that insurance rates are at an all-time low, there has never ben a better time to look into car finance, but let’s not be silly about things.
Yes, it might be tempting to borrow as much as you possibly can, but the repayment schedule will not be forgiving! Instead, find a car that you know you will be able to afford in both the short and long-term, including tax, insurance, fuel and maintenance, alongside loan repayments and don’t stretch yourself too far. After all, predictions as to post-Brexit costs are just that; predictions. Until the UK has actually left, there is no way to know for certain exactly what the implications are going to be in terms of motoring price hikes.
Advice for new drivers
For anyone that looks set to be taking their driving test around the time that the UK is predicted to make the break from the EU, there are a few top tips to follow, in order to protect against unreasonable costs:
- Start saving for insurance way before taking the driving test. If you can pay for your premium in one hot, you will make a significant saving.
- Resist the urge to buy a high-powered or ‘hot hatch’ vehicle, as these will cost you a lot more to insure.
- Consider asking for extended driving qualification tuition as a birthday gift, so you can reap the benefits, without paying for the course.
When will the changes take effect?
We are already seeing the impact of the Brexit vote, despite no progress being made in terms of actually cutting ties and leaving the single market. Of course, when things actually start moving with more certainty, the true financial implications will become clear, but for now, it’s safe to assume that things can only get worse, at least in the short-term. Preparation is better than cure, s start saving now and thank us later!