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Average cost of running a car

March 29, 2023

What is the average cost of running a car?

Understanding the real cost of owning a car

If you’re thinking of buying a car, the question of what you can afford is more complex than the purchase cost of the car itself. In this guide, we’ll look at the ongoing expenses you’ll have in running costs to keep your car safe and legal. From fixed expenses such as insurance and road tax to the hidden costs you might not have considered, here’s what you’ll need to budget.

Fixed expenses

First up, owning a car entails a number of fixed expenses, most of which can be covered annually or split to spread the cost monthly. Insurance is the most obvious one, and its cost will depend on a huge number of factors – from the type of car you’re using to how many years you’ve been driving, to where you park the car and even what you do for a living.

The cost of road tax depends on how eco-friendly your car is, when it was registered and its list price. Older, second-hand cars are likely to attract a larger road tax bill because they produce more emissions, and while electric cars are currently exempt, this may change after April 2025. There’s also a £55 charge for registering a new car with the DVLA for the first time.

Another fixed cost you’ll need to budget for is breakdown cover, also known as roadside assistance. While the hope is always that you won’t have to use it (as with insurance), it gives you the peace of mind that if you do end up breaking down, you won’t be left stranded by the side of the road. The cost will depend on what add-ons you choose, such as home start or courtesy cars.

Finally, if your car is more than three years old, you’ll have the annual cost of an MOT. While the cost of the test itself is capped at £54.85 (and many garages offer them for less than this), there’s always the chance that remedial work will be needed if the car fails the test.

Variable expenses

This brings us to the subject of variable expenses. It’s these that make the overall cost of running a car more unpredictable and harder to budget for. Fuel (or EV charging) is obviously a big one; even if you’re commuting to work and know how many miles you’ll be doing each week, the price of fuel fluctuates, varying costs from one week to the next.

Then there’s the cost of maintenance. Routine maintenance is easier to budget for, as it’ll cover the things taken care of during servicing, such as an oil change, new filters and so on. Every so often, you’ll need to budget for a new set of tyres, the cost of which will vary depending on the brand you go for and the type of tyres your car needs.

Finally, a variable expense that is much harder to predict: repairs. Whether it’s a dent caused by someone opening their door into yours, a new windscreen to replace one that’s been cracked or something much bigger like a new clutch, car ownership is always going to entail the worry of an unexpected repair bill.

Hidden expenses

So far, it seems straightforward. But there’s a third category of expenses that car owners have to consider, and that’s the hidden costs. Depreciation is the biggest of these. Though the amount of value your car loses depends on its type and age when you buy it, on average, cars lose 20% of their value in their first year, and 50% in the first four years. 

You’ll need to factor in the practical costs of using your car, such as paying for car parks or parking fines, and using toll roads. If you’re relying on on-street parking, you might use up more fuel driving around looking for a parking space, which adds to your costs. You might also want to invest in security measures such as dashcams to keep your car safe.

Finally, remember that if you’re involved in an accident where someone else damages your vehicle, even if you claim the repair costs through their insurance, it still puts the price of your own premium up.

Is a car subscription a better option?

If you’re feeling overwhelmed intimidated by the sheer number of different costs associated with owning and running a car, there is a better way. Car subscription services replace this long list of expenses with a fixed single monthly cost that covers virtually everything: fully-comprehensive insurance, tax, maintenance, breakdown cover to name a few. All you need to do is put the fuel in or charge your vehicle and you’re good to go. 

This way of having a car frees you from the worry of budgeting for so many different and varying costs, so you’ll always know what you’re going to pay each month. Once you take into account the much lower upfront payment needed in a car subscription (just one month’s payment upfront, which you get back at the end of the subscription), it can work out cheaper than owning a car outright.

Final thoughts on the cost of owning a car

Being a car owner has lots of perks, but the running costs come with many uncertainties. While some are easy to budget, others vary and can leave you with a big and unexpected bill to cover. That means it’s important to consider all the potential costs as well as the purchase price when you’re thinking of buying a car. 

Alternatively, you can keep things simple by opting for an all-inclusive car subscription and enjoying the perks of ownership without the hassle. Why not browse our cars and see what might suit you?