This article will give you an overview of the typical costs of running a car in the UK, helping you make informed decisions on how to budget for your vehicle.
How much does it cost to run a car?
Owning a car is often seen as a symbol of freedom and convenience, but these are accompanied by additional costs that every car owner must consider. Indeed, if you’re considering buying a vehicle, it may be good to tot up what costs will come your way, from fuel and insurance, to maintenance and repairs.
Some of the typical costs of running a car include:
The car itself
The first big expense for any driver is the cost of the car itself. In the UK, new car prices can range from around £12,000 for smaller models to £40,000+ for larger or more premium brands. Second-hand vehicles are often a more affordable option, although bear in mind they may require more repairs or maintenance, depending on their age and mileage. Whether you choose new or used, this initial choice sets the stage for ongoing car costs.
If you aren’t paying the whole cost upfront, car financing options are available. These can include a car loan, or Personal Contract Purchase, Hire Purchase and Personal Contract Hire. This allows you to spread the cost over several years. However, you will be charged interest – and each method has its pros and cons. It’s important to take time to understand exactly how much you’ll end up paying over time, as well as what the future value of the vehicle will be at the end of the agreement.
(non-electric) Fuel costs
Fuel is an unavoidable expense and one of the largest ongoing costs for car owners in the UK. The amount you’ll spend on fuel will depend mainly on how many miles you drive and the vehicle’s fuel efficiency. But this can also be affected by your driving habits and the current price of fuel, which fluctuates due to factors like global oil prices.
In recent years, fuel prices in the UK have ranged between £1.50 to £1.80 per litre, with the RAC reporting the highest average price as £1.91 per litre of petrol (on 3 July 2022) and £1.99 per litre of diesel (on 25 June 2022). For a car with an average fuel efficiency of around 40 miles per gallon (mpg), driving 10,000 miles annually would cost around £1,700 – £2,000 in fuel alone.
However, prices will vary. For those with more efficient vehicles or hybrid models, these costs can be reduced, while owners of less efficient or older cars might expect to pay even more.
Electric costs
When it comes to charging electric cars, the cost varies, with prices being typically cheaper than petrol or diesel. At current prices, and assuming 10,000 miles, you can expect your average electric charging costs to be between £500 and £1,300 per year, depending on whether you’re charging at home or at a public charging point.
Insurance premiums
Car insurance is a legal requirement in the UK, and it can be one of the more substantial running costs, especially for new or younger drivers, due to their higher risk profile. It’s not uncommon for a new driver to be charged in the thousands for car insurance.
The average UK car insurance premium is, however, around £500 per year, although costs can vary widely based on factors such as a vehicle’s make and model. Some high performance and luxury cars will be more expensive to insure.
Similarly, location can also be a factor. For example, urban areas with higher accident rates or car theft can increase premiums. A clean driving record with a lengthy no-claims discount can also significantly reduce insurance costs.
There are some ways to lower insurance premiums, such as adding a more experienced driver to your policy, increasing the voluntary excess, or taking out ‘black box’ (telematics) insurance that monitors driving behaviour.
Road tax
In the UK, car owners must pay vehicle excise duty (VED), commonly referred to as “road tax.” The amount varies depending on the car’s CO₂ emissions. Low-emission vehicles, including electric cars, benefit from significantly reduced, or even zero, road tax. Higher-emission cars may cost several hundred pounds per year.
Car maintenance and servicing
Regular maintenance is essential to keep a car running smoothly. The amount this costs can vary widely, depending on the make, model, and age of the vehicle. Basic maintenance typically includes oil changes, tyre replacements, brake checks, and annual servicing.
For example, an annual service can cost from £100 to £300, depending on the service level and type of vehicle. Tyres, on the other hand, can set you back around £50 to £100 each for standard models, but premium tyres can cost much more.
On average, car owners in the UK should budget between £300 and £500 annually for routine maintenance, with additional allowances for unexpected repairs or breakdowns.
MOT
An annual MOT is required for cars aged three years or older to check they meet UK road safety and environmental standards. The test costs up to £54.85 for cars, but if repairs are needed in order to pass, costs can be considerably higher. MOT test failures are common for items such as tyres, lighting, and brakes, so budgeting for potential repairs is wise.
Loss of vehicle value
The loss of a vehicle’s value (‘depreciation’) is often overlooked, but it’s one of the most significant costs of car ownership. New cars can lose 15-35% of their value in the first year alone – and up to 60% within three years. This varies by make, model, and market conditions, but in general, high-value vehicles and high-mileage cars tend to lose value faster.
If you’re planning to sell or trade-in your car after a few years, depreciation is a real financial consideration, as it directly impacts the car’s resale value.
Parking charges
If you don’t have a driveway, you may have to pay for a permit to park your car on the road or street outside. Plus, car parking fees vary widely depending on location and time. Drivers should consider these expenses, as they can quickly mount up, so do your research before buying.
Driving and road charges
If you drive in urban areas or large cities like London, you may need to budget for additional fees and congestion charges. For instance, the London Congestion Charge is £15 per day. You may also encounter toll roads, such as the Queen Elizabeth Bridge and the M6 toll. Plus, as more environmentally friendly measures are introduced, some UK cities have introduced low-emission zones (ULEZ), where certain vehicles have to pay a charge. This is another expense for drivers to be aware of, especially if their car does not meet certain environmental standards.
Breakdown cover
Breakdown cover isn’t legally required but can be really useful in an emergency. Basic breakdown cover starts at around £40 per year, but more comprehensive policies, including recovery, onward travel, or home start, can cost up to £250 annually.
Reducing car running costs
To reduce car expenses, consider a fuel-efficient or hybrid vehicle to minimise fuel costs. Also, shop around for insurance and take advantage of any multi-policy discounts or telematics options. Opt for greener alternatives such as carpooling or walking when possible. Plus, keep on top of regular maintenance to avoid costly repairs.
By understanding these factors and budgeting accordingly, you can make the most of car ownership while keeping expenses manageable. So, whether you’re buying your first car or reassessing your current budget, having a clear picture of these costs can help you plan effectively and hit the road with peace of mind.
