How Much Does it Cost to Run a Car?

Written by Karen Bryan

how much does it cost to run a carThere’s no doubt that car running costs can eat up a fair proportion of your current spending. Below I’ve broken down the costs of running a car when you purchase the car upfront, either by paying cash or taking out a personal loan to fund the purchase. There are other options for having a car such as Personal Contract Purchase and Personal Contract Hire.


I always set aside money to cover the cost of replacing our car. We buy our cars for cash, so we don’t have loan repayments, with one exception, when we got a deal of 0% interest on 50% of the purchase price. We currently have a Skoda Fabia 1.4 TD that I bought nearly new with 6 miles on the clock for £8500 in October 2004. You can buy car value protection insurance which will pay the difference in value between your insurance company’s payout and the car’s value when purchased.

Here is an example of how I work out our depreciation. On average our cars last until they are ten years old. If I divide £8,500 by 10 that’s £850 per year, or £71 a month. However you have to be aware that a car depreciates more in it’s first few years than later in its lifespan. Therefore I am assuming that the car will last for a few years in this calculation.  If we’d a crash when the Fabia was a year old and the car was deemed a write off, the insurance payment we’d have received for the car would’ve probably been a lot less than £7650 i.e. £8,500 – £850 (one year’s depreciation).

Setting aside the money to replace our car is a large part of the cost of running a car. However this strategy ensures that we have the money ready to purchase a replacement if our car is badly damaged or beyond economic repair., avoiding the need to take out a loan or rack up the credit card balance.

Motor Insurance

How much you pay for motor insurance depends on the car you drive, your age and your driving/claims record. We currently have M&S car insurance at a cost of around £300 for the year. It is fully comprehensive for my husband and me as named drivers and includes RAC breakdown and recovery. I used the price comparison site to find the best deal.  We are considered low risk, driving a diesel supermini, being in our 50s with clean driving licences and not having any claims for ages.


You need to have an allowance to cover wear and tear such as tyres and brake pads, MOT test (if your car is 3+ years old) and servicing. Our Fabia still has its original battery and exhaust, but they could go at any time.  We service our car regularly at a local garage recommended by neighbours. I reckon we spend about £800 a year on car maintenance.


You need to work out the average miles per gallon (or kilometres per litre) that you get from your car to estimate fuel costs. The site is very useful for doing these calculations. Our Fabia gives around 65 miles to the gallon, if we keep to around 60 mph on the open road. We average 10,000 miles per year, so with diesel currently (20 August 2011) at 135.9 pence per litre, our annual fuel cost is around £1000.

I believe that fuel prices will keep increasing in the long term. If you are replacing your car, going for a more economical car will save you money. Your driving style and speed can also influence fuel consumption.

You can read my take on the running costs of petrol versus diesel cars.

Road Tax

UK road tax varies according to your car’s emissions. The Fabia’s road tax is pretty cheap at £90 a year. Some new superminis are exempt from road tax.


As you can see there’s a big variance in how much it costs to run a car. However by having a small car, shopping around for car insurance, looking out for money-off fuel vouchers, driving carefully and only doing essential trips you can save money on running costs.

Having a car is a cost that we’re willing to shoulder for the benefits we get. The car gives us a lot of freedom to go for days out, short breaks, visit our sons and get to and from the airport for early morning departures and/or evening touch downs. You have to decide if having a car offers you a good return on your spending and enables you to live the life you want.