Car running costs – a complete guide to help you save money

Car running costs – a complete guide to help you save money
With the cost of living crisis impacting people all over the country, millions of families are looking for ways to cut costs where they can. This guide looks at car running costs and what you can do to save your money.

For the majority of adults in the UK, you will need a car to get to work, visit friends and family, and get to wherever you need to be – but there are some helpful ways to cut your bills and keep your vehicle in great condition.

And for those who are looking at making as many savings as possible, we have outlined several other important guides that are available to help you with this.

Upfront costs

Whether you are buying a new car, a second-hand vehicle, or you are going through finance or leasing – there is often a significant upfront cost if you are buying a car.

A report from the Office for National Statistics and NimbleFins revealed that the average cost for a new car range anywhere from £12,000 to £36,000 for UK residents – dependent on the make, model, and modifications.

And figures released by Auto Trader earlier this year showed that the average price of a used car is just short of £18,000. However, that figure has likely increased due to the current cost of living crisis and a shortage of new vehicles available in forecourts.

Depending on a wide range of factors, the potential cost of leasing a vehicle can start for as little as £100 a month and can rise into the thousands.

However, if you do purchase a vehicle – new or second-hand – you will have to face the fact that you are extremely unlikely to make your money back.

In fact, depreciation rates can plummet up to 35% of the original value of a new vehicle within a year of purchasing. This increases year-on-year, to a point that after 3 years, the car can be worth less than 40% of its original cost.

RAC Cars have a range of over 300,000 new and used cars available today.

What are the running costs of owning a car?

For those of you that already have a vehicle, you will not need to worry about the upfront costs – however, owning a vehicle can become quite expensive.

In the UK this year, there has been the largest increase in the price of petrol and diesel on record – due largely to the Russian invasion of the Ukraine, and the subsequent fall out across the world.

RAC Fuel Watch keeps track of the latest prices, and is a useful tool for all drivers.

And at this current time, where the cost of petrol and diesel is causing issues for millions across the country, knowing some fuel saving tips can help save you money.

Another potentially expensive running cost is keeping your tyres in safe and roadworthy condition.

Tyre safety is often overlooked by drivers, and if neglected they could end up costing a fortune to replace – as well as leading to crashes or legal issues if they are not road legal.

Checking your tyre pressure not only helps preserve your tyres – but also makes them more economic to drive.

When it comes to your tyres, if you need to lower your running costs, knowing how to get the most out of them before replacing them can help make serious savings.

Later in this guide, we will highlight many other maintenance costs that need to be made on your vehicle, but it is important to consider that on average, a UK driver spends around £1300-£1600 a year on maintenance and service. This includes fuel, cleaning and any repairs needed.

MOT and Service

An integral part of every car owner’s year – the MOT and service.

The Ministry of Transport test – known commonly as the annual MOT – is a test your vehicle must pass to ensure it is road legal and safe to drive. This only applies to vehicles that are more than three years old.

According to the Government, it is illegal to charge someone more than £54.85 for an MOT – and they usually take no longer than an hour.

However, if there are any faults that need to be fixed – the costs can run up to the hundred and even thousands of pounds.

According to the Express, the average cost of an MOT and repair in the UK is £326.85.

For anyone who knows that their MOT is coming up soon, then having a checklist and guide on what to expect can make a huge difference.

Book an MOT today with the RAC.

Often when you take your car in for its MOT, you will be offered a full service – however, these can be taken at any point throughout the year and can help keep your vehicle in top condition.

It can also result in drivers avoiding running up costly damage when it comes to the annual test.

Ideally, your car should be serviced every year or every 10,000 miles.

According to Checkatrade, a full service for a small car costs on average £155; £205 for a medium-sized car; and £395 for a larger vehicle.

If you are unsure on whether you should take your car to an RAC Approved Garage to see how we can help. You can also book a service today.

There are often some common signs that your car needs a service – so don’t delay and save money in the long run by keeping your car in the best shape possible.

Car Insurance

Fully comprehensive car insurance helps protect you and your vehicle from incurring costs for any damages. It also financially protects you against any financial burden that comes from injury following a collision.

In the UK, you must have insurance for your vehicle if you use it on the roads and in public places.

If you drive uninsured, then you will get a fixed penalty of £100, have your vehicle clamped, impounded, or destroyed, and face a court prosecution.

According to Money Supermarket, the average cost of car insurance in 2021 was £412 for comprehensive cover. This can alter drastically due to age of driver, location, where it is kept, type of vehicle and much more.

You can declare a vehicle off the road by completing a SORN.

If you are looking at cutting costs, these tips can help you get cheaper car insurance.

There are also several other types of insurance relating to your vehicle that you should be aware of.

Car tax

Earlier this year, the UK Government announced that there would be an increase in car tax.

After of April 1st, UK drivers started to feel the impact of the latest car tax rises, after new Vehicle Excise Duty (VED) rates were published.

Now, most motorists will be charged an extra £10 to £30 each year – adding to the ongoing cost of living crisis. The VED increase is in line with the lates Retail Price Index (RPI).

The changes have meant substantial increases for drivers, especially those buying brand new cars – as they could be charged an extra £120 for first its first year on the road – known as a showroom tax.

These new VED rates impact all petrol and diesel powered vehicles and range from £10 a year, up to an annual payment of £2355.

Breakdown cover

Another important annual expense is breakdown cover for your vehicle.

If you are unfortunate to have a breakdown, take these steps to protect you, your passengers, and other road users – as well as your car.

You can get breakdown cover for less than £10 a month, and it can help avoid any large payments as the result of your car falling you.

The RAC is the country’s top breakdown cover provider, as judged by more than 50,000 drivers who took part in the 2021 Auto Express Driver Power survey, the largest study of its kind in the UK and one that has been running for the last 20 years.

Car maintenance costs

It is possible to budget for most of what a year of driving will cost you – however, when your car has a breakdown, or needs repairs – there are some costs you might not be prepared for. Some repairs are very expensive, so being sure your car is in optimum condition is of paramount importance.

Throughout the year, you may get bumps and scratches that need preparing; windscreens may need replacing; and air-con might need to be re-gassed.

Some of these repairs may be covered by your insurance – but others may not.

Other maintenance costs would include cleaning, and buying lubricants/oils that keep your car in top condition.

According to data from Kwik Fit, the average UK driver may spend more than £150 a year on general upkeep of your vehicle.

Other car running costs

So far, the prices outlined highlight the cost of owning and running a vehicle – however, there are some other ways you could be charged for being behind the wheel.

Throughout the year, you will ned to pay for parking at some point. Shopping centres, hotels, airports, and on-street parking in towns and cities often come with a charge. Many cities have a number of multi-storey car parks where you can leave your vehicle.

Our parking guide can help you make the right decision, but the important information to understand is that you can get a fine if you park illegally or for an extended period of time.  

If you travel a lot, you may also have to face toll roads. Although the UK does not have very many toll roads, using the RAC Route Planner, you’ll be able to find the best route possible and where you will find a toll.

Every day you are behind the wheel, you must respect the speed limit. Exceeding this could result in a speeding fine. Depending on where you broke the limit, and by how much, you could receive a hefty fine, points on your licence, or even disqualification from driving.

These are impossible to budget for, and are the responsibility of the driver to respect the rules of the road, and be aware of their surroundings.

How to save money

With the cost of living crisis deepening across the UK, we have highlighted a few more of our guides that can help you save some money.

These 30 money saving motoring tips are a good place to start for all drivers.

Perhaps the most relevant saving tip at the moment is related to the ongoing price of petrol and diesel. This fuel saving guide can help you make the most of what is currently in your tank.

Regular car checks can help you avoid any unwanted maintenance costs that can occur at any point throughout the year. Being vigilant and frequently looking over your vehicle will help you cut costs.

And a by-product of doing these regular checks will you that you can make your car last longer – meaning no large costs of getting a new vehicle.

Is it time to buy an electric vehicle?

If you’re thinking of driving an electric car, the upfront or monthly leasing cost can be higher than an equivalent petrol or diesel model.

However, in most other regards an electric vehicle (EV) will be cheaper to run, which potentially adds up to large savings over time.

This guide on the running costs for an EV outlines the pros and cons of getting an electric car in the future.

We hope this guide will help you manage the price of owning and running a car during this cost of living crisis. If there is any other information you wish to know about the annual price of being a car owner, let us know in the comments below.

50% off Breakdown Cover Sale

50% off Breakdown Cover Sale

Get covered in our half price Breakdown Cover sale from just £4.75 a month.* We're the UK’s best breakdown provider as voted by Auto Express drivers 2021.

50% off Breakdown Cover Sale

*New, single personal based cover. £4.75 for Standard cover. Ends 12/08/22, 7am.