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The true cost of running a car

If you’re thinking of buying a new car, or just wondering if a different mode of transport could be a cheaper alternative to driving, our thorough guide will help you consider the true cost of running a car.


Standing charges

Standing charges are the cost that relates to owning a car and keeping it available to use on the roads. These costs are generally fixed and will need to be paid regardless of how much you use the car.


Car insurance

Unless your car is declared as a SORN (off the road), it is a legal requirement to have car insurance. The minimum level of car insurance is third-party only insurance, which covers damages to other people’s property, vehicles and any medical costs in an accident that’s your fault.

If you desire a higher level of cover, you could opt for a third-party, fire and theft policy. In addition to the elements covered under third-party only insurance, this will also cover you if your car is stolen, damaged by a fire, or damaged during an attempted theft.

The highest level of car insurance available is comprehensive cover, which will cover you, your car and any third party in the event of an accident.

Car insurance is calculated based on your risk, with insurance for younger, less experienced drivers generally being higher than older, more experienced drivers. Other factors that can affect the cost of insurance include where you live, your driving history, if you have any outstanding convictions and the car insurance group of your vehicle. You can choose to pay for your car insurance either yearly or monthly, however, there is often a credit charge for choosing the latter, making the overall cost more expensive.

Road tax

Road tax, also known as car tax or vehicle exercise duty, must be paid to drive most cars on the roads. For cars registered after 2001, the amount of tax you will have to pay will depend on the amount of CO2 emissions your car produces. Since the government updated road tax costs in April 2018, the amount of road tax you pay will also take into consideration the list price of your vehicle.


Depreciation is the difference in value between when you buy a car and the current value. All cars depreciate at different rates, with some car’s holding their value better than others. In order to decrease the rate of depreciation, you should keep the car in good condition, not drive any unnecessary miles and ensure the car is serviced at regular intervals.

Loan interest

If you buy a car on finance or use a personal loan, you will need to factor in the interest payments when considering the cost of ownership. It is important when taking out finance that you check how much interest you are paying over the duration of the loan to ensure you’re not overpaying.


Running costs

The running costs are those associated with using the car. This means that if you don’t use the car, you won’t incur any running costs. However, the more you drive the car, the higher the running costs.



Fuel can be one of the highest running costs when running a car, especially if you regularly drive long distances. How much you spend on fuel will depend on the type of fuel your car uses, how many miles you drive, how economic your car is and your driving style. Where you get your fuel from can also affect how much you spend, with fuel prices changing regularly and being priced differently depending on the location.

Services and MOTs

Every car that is over three years old must have a valid MOT certificate and must be tested every 12 months thereafter to ensure it is in a safe, roadworthy condition. In addition to MOTs, it is recommended that your car is serviced at regular intervals, in accordance with the manufacturer’s recommended schedule. By regularly servicing your vehicle, you will be increasing the car’s lifespan and reducing the chance of underlying issues that could be costly to repair. Furthermore, a full-service history helps retain your car’s value and reduce the rate of depreciation.

Replacement parts

The parts on your car will become worn and eventually need replacing. Parts that may need replacing regularly as a result of driving include tyres, brake pads, oil, filters, bulbs and wipers. However, as your car becomes more worn, you may need to replace bigger parts such as transmissions, engines or suspensions. It is important to budget for repairs to ensure you can afford to do them as they’re required. When considering the costs of replacement parts, you will also need to consider the labour costs, which will vary by garage.

Parking and toll charges

Parking and toll charges may not be applicable to everybody, but if you regularly drive in areas where these fees apply you will need to factor them into your monthly running costs. If you regularly need to pay for parking at work or have to drive on toll roads regularly your costs will be inevitably higher.


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