learn about car ownership and costs of running a car

If you have never bought one before, it’s important to know that there are also running costs on top of the price of buying a car.

Many people can’t buy a car outright, so they will look into financing used cars. If you’re thinking about financing options, you should also look into the total cost of running a car. This includes things like regular servicing, MOTs, fuel, tax, insurance and other expenses.

This guide will help you figure out if you can afford a car by breaking down all the costs you need to keep in mind, not just the purchase price.

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Can I afford a car?

It can be tempting to focus only on the price of the car you want, but it’s important to remember that owning a car comes with extra costs. These include regular running and servicing expenses. Make sure that these costs, along with your monthly finance payments, are manageable within your budget.

How much do cars cost to run?

When thinking about the costs of owning a car, here are some expenses to consider:

Fuel costs

The amount you’ll spend on fuel depends on your driving habits and the car you drive. Fuel-efficient cars can save money in the long run. Some fuel stations can offer cheaper prices, and if you have an electric or hybrid vehicle, you might even find free charging stations.

As of 2024, the average price of petrol in the UK is around 145-155 pence per litre, and diesel costs approximately 155-165 pence per litre. For an average car, driving 10,000 miles a year, the annual fuel cost could range from £1,200 to £1,500, depending on your car's fuel efficiency and your driving habits.

Electric cars can be cheaper to run, but the cost depends on where and how you charge them.

Car servicing costs and car maintenance

Regular car maintenance is important to keep your car running smoothly. There are a number things involved in the up keep of your car, some are legal requirements.

MOT test

MOT stands for Ministry of Transport. It’s the government department that introduced annual tests, to check your car’s safety and emissions. MOT tests are a legal requirement of owning a car. New cars don’t need an MOT until they’re three years old. The average cost of an MOT in the UK is around £55.00, but prices can vary depending on the garage.

A mechanic will need to complete an MOT test for you. If your car fails the test, the garage will contact you to discuss any work or repairs that need doing. Any work will come with an additional cost.

During an MOT, the mechanic will check important parts of your car, including:

  • Lights (front, rear, fog, indicators), reflectors, number plates.
  • Car battery, electrics and wiring, horn and speedometer.
  • Steering (steering wheel, locking device, power steering) and suspension (including shock absorbers).
  • Car brakes (foot brake and hand brake).
  • Tyres and wheels (to include checking for damage and ensuring the tread on your tyres is not thin).
  • Seat belts.
  • Exterior of the car and bodywork.
  • Exhaust and fuel emissions.
  • Mirrors, windscreen and windscreen wipers.

Car servicing

Regular car services help maintain your car's condition and can make it more attractive to buyers in the future.

Interim services, which are recommended every six months or 6,000 miles, typically cost between £75 and £125. It includes checks on:

  • Brakes.
  • Fluids (brake fluid, coolant, screen wash, engine oil).
  • Battery.
  • Lights.
  • Tyres.

Full services, recommended every 12 months or 12,000 miles, can cost between £150 and £250, depending on the vehicle and the service provider. In addition to the work done on an interim service, a full service also includes checks on:

All lights, tyre condition and exhaust.

  • Brakes and steering.
  • Engine oil and car filter change.
  • Hydraulic fluid and coolant.
  • The cooling system.
  • Suspension.
  • The car battery.
  • Steering alignment.
  • Spark plugs.

Replacing fuel filters

As part of regular maintenance, replacing the fuel filter is important to ensure your car runs efficiently. The cost to replace a fuel filter in the UK can range from £60 to £150, depending on the car model and the labour involved.

Repairs

Repair costs can vary a lot depending on the issue and the car model. Common repairs like brake pad replacement can cost around £100 to £300, while other repairs like replacing a clutch can cost upwards of £500 to £1,000. It's always best to get multiple quotes to ensure you're getting a fair price.

Tax and insurance

These are ongoing expenses that you'll need to factor into your budget for the running costs of your car.

  • Car tax:Also known as Vehicle Excise Duty (VED). This is based on your car’s emissions and fuel type. Electric cars typically have lower or zero tax rates, whereas petrol and diesel vehicles may incur higher charges. For example, a vehicle emitting 131-150 g/km of CO2 might attract an annual tax of around £150.
  • Car insurance:This is legally required to drive on UK roads. The cost depends on factors like your age, address, and car type. The average car insurance premium in the UK was around £490 in 2023 , but it can be much higher for younger drivers. Options like black box insurance and higher voluntary excess can help lower your premiums.

Additional costs

There are extra costs that need to be considered, which might not be obvious when you first look at the cost of running a car.

  • Breakdown cover and warranty:These are both optional but can provide peace of mind in case of emergencies. Breakdown cover can cost from £30 to £100 annually, depending on the level of service. Extended warranties, which cover unexpected repairs after the manufacturer's warranty expires, can cost between £200 and £500 annually.
  • Tyres: Tyre replacement can be an unexpected expense. Different types of tyres have varying costs, with budget tyres starting at around £50 each and premium tyres costing up to £200 or more per tyre. In addition to replacement, consider the cost of balancing and alignment, which can add another £30 to £70.
  • Depreciation: Depreciation (the amount a car loses in value as it gets older) is often the biggest hidden cost of car ownership. On average, a new car loses about 15-20% of its value each year, with the most significant drop occurring in the first year. Over three years, a car can depreciate by up to 50% or more, depending on the make and model.
  • Parking and congestion charges:If you live in or frequently drive into urban areas, parking fees can add up quickly. In London, parking can cost £4 to £6 per hour, and even residential permits can range from £100 to £300 annually. Additionally, congestion charges can add significant costs if you regularly drive in those areas. The current London Congestion Charge is £15 per day.
  • Tolls and road charges: Certain motorways, bridges, and tunnels in the UK require toll payments. The cost varies but can range from a few pounds for bridges and tunnels to over £6 for some motorway sections.
  • Fines and penalties: It is important to be a careful driver. If you are not, parking tickets or speeding fines can add unexpected costs to car ownership. Fines can range from £60 for minor parking violations to over £1,000 for more severe offences, such as driving without insurance.

Car maintenance and repairs

Regular maintenance is important not only for the longevity of your car but also for safety. Avoiding maintenance can lead to higher repair costs down the line. Common car maintenance includes:

  • Oil and filter changes: Necessary for keeping the engine running smoothly, costing between £50 and £100. For high-end or performance vehicles, these costs can be significantly higher.
  • Brake pads and discs: Replacing brake pads typically costs between £100 and £300, with brake discs adding an additional £150 to £350. For high-end or performance vehicles, these costs can be significantly higher.
  • Battery replacement:Car batteries usually last 3-5 years, with replacement costs ranging from £50 to £200.
  • Exhaust system repairs:A damaged exhaust system can affect fuel efficiency and emissions. Repairs can range from £100 to £400, depending on the issue. For high-end or performance vehicles, these costs can be significantly higher.
  • Suspension repairs: If you notice unusual noises or handling issues, your suspension may need attention. Repairs can range from £150 to £700, depending on the problem and the vehicle. For high-end or performance vehicles, these costs can be significantly higher.

Unexpected car repair costs, such as replacing a timing belt or fixing a transmission, can be expensive, often costing several hundred to over a thousand pounds. Having a contingency fund or considering a warranty extension could help manage these costs.

Cost of car ownership

The total cost of car ownership extends beyond the initial purchase price. On average, UK drivers can expect to spend between £2,500 and £4,000 per year on their vehicle, which includes fuel, insurance, tax, car maintenance, and repairs.

Depreciation is the loss in value of a car over time. The biggest impact is on new cars. Depreciations happens because a car gets worn out over time. When you buy a new car, it can quickly lose value because as soon as you drive it away it is not brand new. This makes it less attractive to buyers. Also, its price when it was new may not be a true reflection of its value.

Although it is not a cost you pay for in cash, it does mean that you are losing money. A car can lose up to 20% of their value in the first year alone.

Car finance with AutoMoney Motor Finance

At AutoMoney Motor Finance, we offer hire purchase agreements that make owning a used car more affordable, especially for those with poor credit histories. With hire purchase, you can spread the cost of the car over manageable monthly payments, making it easier to fit into your budget. This method of finance also allows you to eventually own the car outright once all payments are made.

Apply for car finance today

If you need car finance to buy a used car, we can help. We offer HP car finance on a wide range of vehicles. To see if we can help you, call our friendly team on the free phone number above, or click through to apply for car finance with us.

Representative example

You could borrow £10,000 over 60 months with an initial payment of £490.66 (including £199 Admin Fee) followed by 58 monthly payments of £291.66 with a final payment of £490.66 (including optional £199 Option to Purchase Fee).

Total amount repayable will be £17,897.60.

29.3% APR, annual interest rate (fixed) 24.7%.

This example uses the representative APR. This is the rate at least 51% of customers are expected to get.

Lending is subject to status and additional affordability checks. Rates quoted are subject to change and will depend on lending amount and personal circumstances.

FAQs

Your fuel cost can vary depending on your car’s efficiency and your driving habits. As of 2024, the average price of petrol is around 145-155 pence per litre, and diesel is about 155-165 pence per litre. For an average car driving 10,000 miles a year, you can expect to spend between £1,200 and £1,500 annually on fuel. Electric vehicles, while potentially cheaper to run, depend on electricity costs, which can vary.

Car insurance costs are influenced by various things, including your age, driving history, the type of car you drive, and your location. Other factors like the level of coverage you choose, whether you opt for additional features like breakdown cover, and even your credit score can also affect your premium. On average, UK drivers paid around £490 for car insurance in 2023, but individual rates can vary widely.

Regular car servicing and car maintenance is important for your cars performance and safety. It's generally recommended to have an interim service every six months or 6,000 miles and a full service annually or every 12,000 miles. The cost can vary, with interim services typically ranging from £75 to £125, and full services between £150 and £250, depending on the vehicle and location. It’s always a good idea to get multiple car servicing quotes from different garages, as servicing prices can vary widely.

To reduce the cost of car ownership, consider driving a fuel-efficient vehicle, shopping around for the best insurance quotes, and maintaining regular servicing to prevent costly repairs. Additionally, driving carefully to avoid fines and penalties, and choosing a car with lower depreciation can help keep costs down.

You should replace your car's tyres when the tread depth falls below the legal limit of 1.6mm, or if you notice signs of wear such as cracks, bulges, or uneven tread. Regularly checking tyre pressure and alignment can also help extend the life of your tyres and ensure safe driving.