Car running costs
Are you getting your head around running a car? It can be tricky to know how much money and time to put into it, but understanding the costs involved and what strategies work best for saving money on car upkeep is key. Here we take a look at how these costs break down and what you can do to minimise them.
What car running costs do I need to consider?
No matter your situation, whether you already own a car or you're looking to buy one, it’s important to be aware of the major expenses when budgeting for car running costs.
Broadly, these costs can be divided into two categories:
The best way to think about part-exchange is that instead of receiving cash for your car, you’re receiving money off the cost of your next car. The amount you’ll save on a new car by part-exchanging your used car will depend on how much the dealer thinks it’s worth . For example:
Standing charges – these are fees you must pay when you own a car whether you are using it or not, such as tax and insurance.
Running costs
Fuel expenses
Planning where to buy fuel – Fuel is usually particularly expensive at motorway services, so try and fill up before you hit the motorway. As prices vary widely across the country, get to know your local area and work out which garages and brands sell the cheapest fuel.
Keep a look out for fuel discount promotions – Many people readily buy their fuel from supermarkets and other outlets because they’re in convenient locations, and they’re often cheaper, too. But always avoid the ‘premium’ fuel pumps unless you are driving a supercar.
MOT and service
If your car is more than three years old, it must pass a yearly MOT to keep it roadworthy. It’s illegal to drive without a valid MOT certificate and you could be fined up to £1,000 if you do.
While you don’t have to service your car by law, doing so regularly can dramatically reduce your bills in the long run: by identifying and fixing little issues you’re better protected from unexpected and often much more costly repairs. It’s generally recommended to have a service at least once a year.
Tyres
Tyres can be expensive to replace, so don’t just wait for the annual service to pre-empt problems. Follow these tips to ensure that your tyres are kept in good condition:
Your tyres will need changing every 20,000-30,000 miles, so keep an eye on them when you’re approaching this many miles on the clock.
You can monitor roadworthiness by checking the tyre tread. The minimum legal tread depth of a car tyre is 1.6 mm so if they are 1.6 mm or less, they’re no longer safe.
Regularly checking your tyre pressure will also help keep them in good condition and could help save your fuel bills, too.
Standing charges
Car insurance
Many factors – including the driver’s age, driving record and the car’s make and model – affect insurance premiums, meaning that prices can vary enormously. Some tips for keeping insurance costs affordable include:
Shop around! Compare insurance rates from different providers to make sure you are getting the best deal.
Choose a car in a lower insurance group (ie a smaller, lower-spec model).
Drive safely. Maintaining a good driving record will help to keep your premium low.
Avoid all modifications: alloy wheels, body kit, not to mention the boy-racer classic – the spoiler – could hike your insurance premium up.
What is black box insurance and how does it work?
Telematics car insurance – or black box insurance – works by allowing the insurer to monitor the way you drive. The insurance company allocates you a score based on your driving performance, which directly affects your insurance premium. Essentially, the more carefully you drive, and the less you drive, the cheaper your insurance.
Your driving is monitored via a small GPS tracking device – a black box – which is installed in your car. Telematics car insurance can often be more cost effective than traditional car insurance, especially if you are a younger driver or if you only drive occasionally.
Car tax
How much tax you will need to pay will depend on various factors, including engine size, fuel type and the amount of CO2 your vehicle releases.
The more pollution your car emits the more tax you will likely have to pay. Tax is payable every six or 12 months, or you can pay your tax in monthly instalments to spread the cost.
See Gov.uk for current car tax rates.
Breakdown cover
Although not a legal requirement, it is always advisable to have some form of breakdown cover. Again, it’s worth shopping around for this – there are lots of online comparison sites that can help you find the best deals for your budget.
Some bank accounts (known as packaged accounts) will offer breakdown insurance for a monthly fee, so check with your bank if this is an option you’d like to explore.
Depreciation
Depreciation is the fall in value of a car over time. All cars will lose a chunk of their value in this way, but newer and more expensive cars will depreciate more dramatically. Aside from keeping on top of repairs, there are a few things you can do to minimise depreciation:
Keep your mileage low – the more miles on the clock, the greater the depreciation rate.
No modifications – bodywork modifications aren’t for everyone and can be costly to replace, so they are best avoided.
Look after your car, inside and out! Keeping it clean and tidy will help keep depreciation at bay.
Keep a full, up-to-date service history and ensure it is regularly serviced in line with the manufacturer's recommendations.
Learn more about car depreciation.