Ultimate Guide to Car Running Costs

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Car Running Costs

Car running costs encompass more than just fuel and insurance expenses. Other factors such as tax, repairs, and depreciation should also be taken into account. So how do you reduce those costs and lower your annual bill?

What are the costs of running a car?

Running a car involves various costs that should be taken into account. These costs can be categorised into two types: running costs and standing charges.

Running costs include the day-to-day expenses associated with operating your vehicle. The major components of running costs are:

  • Fuel: Fuel expenses make up a significant portion of the running costs. The amount spent on fuel depends on factors such as fuel efficiency, driving habits, and the distance travelled.

  • Servicing and repairs: Regular servicing and maintenance are necessary to keep your car in good condition. This includes oil changes, filter replacements, and other preventive measures to ensure optimal performance. Additionally, unexpected repairs can arise, which may require additional expenditure.

  • Insurance: Car insurance is a legal requirement and a crucial part of owning a vehicle. The cost of insurance depends on various factors such as the driver’s age, driving history, and the car’s make and model.

Standing charges encompass the costs associated with owning a car, regardless of whether it is driven or not. These charges typically include:

  • Vehicle tax: All vehicles registered in the UK are subject to vehicle tax (also known as road tax or Vehicle Excise Duty). The amount varies based on the vehicle’s emissions and fuel type.

  • MOT: The Ministry of Transport (MOT) test is a mandatory annual inspection to ensure your vehicle meets safety and environmental standards. The cost of the MOT test itself is a standing charge.

  • Depreciation: Depreciation refers to the decline in a car’s value over time. It is an important consideration, as the value of a car typically decreases each year.

To effectively manage the costs of running a car, consider the following tips:

  • Choose a fuel-efficient vehicle: Opt for a car with good fuel economy to reduce your fuel expenses.

  • Regular maintenance: Regularly service your car to minimise the risk of major repairs and keep it in optimal condition.

  • Comparison shop for insurance: Get car insurance quotes from different insurance providers to find the best cover at a competitive price.

  • Budget for repairs: Set aside funds for unexpected repairs and maintenance to avoid financial strain.

  • Research vehicle depreciation: Consider the resale value and depreciation rate of a car when making a purchasing decision.

By considering these costs and implementing cost-saving measures, you can better manage the expenses associated with running a car and make informed decisions to reduce your overall expenditure.

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What running costs do I need to consider?

When considering the running costs of a car, there are several factors you need to take into account. These include:


The cost of fuel is a significant expense. It depends not only on the price of fuel but also on your car’s fuel efficiency, how frequently you use your vehicle and your driving habits. It can be beneficial to compare fuel prices in your local area and identify cheaper fuel sources.

Regular maintenance and replacement parts

Certain car parts, such as tyres, wiper blades, and fluids, need regular maintenance or replacement. Proper maintenance can extend the lifespan of these components and reduce costs in the long run. It’s important to monitor fluid levels and top them up as necessary.

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Car Mot

Service and MOT

If your car is over three years old, it requires an annual MOT to ensure it meets safety and environmental standards. The cost of an MOT varies, but there is a maximum fee that MOT testing garages can charge.

  • Cars: £54.85
  • Motorbikes: £29.65

Additionally, regular servicing is recommended by vehicle manufacturers to keep your car running smoothly and maintain its value.


Even with regular servicing, unforeseen repairs can arise. The cost of repairs is difficult to predict, making buying a used car somewhat of a gamble. However, some dealerships offer warranties that cover repairs, providing more certainty in terms of costs.

Humber Bridge

Parking and tolls

Parking charges, both for resident parking and when out and about, should be factored into your overall costs. In some areas, local authorities may impose surcharges on parking permits for diesel vehicles due to pollution concerns. Additionally, congestion charges and tolls may apply in certain cities or on specific roads, such as the M6, Mersey Tunnels, or Humber Bridge.

It’s important to budget and plan for these costs to effectively manage the expenses associated with running a car. Additionally, adopting fuel-efficient driving habits, maintaining your car’s condition, and researching cost-saving measures, such as parking alternatives, can help reduce overall expenditure.

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What standing costs do I need to consider?

When considering the standing costs of owning a car, there are several factors you need to take into account:

Buying costs

If you finance your car through a loan or a personal contract purchase plan, you’ll have monthly repayments to meet. Use a car finance calculator to assess the affordability of a car loan.


As soon as you drive a new car off the dealership, it begins to lose value. The extent of depreciation varies depending on the make and model of the car. Factors such as mileage, number of previous owners, warranty and service history, fuel economy, and safety ratings can affect depreciation. Choosing a car with lower depreciation can help maintain its resale value.

Car tax

The amount you pay for car tax depends on your car’s engine, fuel type, and CO2 emissions. You can check the latest tax rates on the GOV.UK website. If your car will be off the road for an extended period, you can make a Statutory Off Road Notification (SORN) and avoid paying road tax.


It is illegal to drive without insurance, and the level of cover you choose is up to you. Compare different levels of car insurance (third party, third party fire and theft, and comprehensive) to find the most suitable and affordable option for you. Consider factors such as your driving history, car value, and desired cover when selecting an insurance policy.

See our money-saving tips to secure the best car insurance deal

Breakdown Cover

Breakdown cover

While breakdown cover is optional, it can provide roadside assistance if your vehicle breaks down. Some policies also offer additional benefits such as tyre replacement, battery replacement, and cover for repairs and labour. Assess the value of breakdown cover and determine if it is worth the cost for your peace of mind.

Considering these standing costs can help you budget effectively and plan for the financial responsibilities of car ownership. It’s important to review and compare options to find the most cost-effective solutions for insurance, breakdown cover, and other ongoing expenses related to your car.

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Calculate your car’s annual running costs

To calculate your car’s annual running costs and incorporate them into your budget, you can use MoneyHelper’s car cost calculator. This tool is personalised to your specific registration number, allowing for accurate calculations.

Money Helper

In addition to basic details like registration number, you can input information such as insurance costs and current mileage to generate a comprehensive breakdown of your car’s expenses.

By using this calculator, you can gain a better understanding of your annual running costs and effectively manage your budget accordingly.

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How can I reduce my car’s running costs?

To reduce your car’s running costs, consider the following tips:

  • Find the cheapest fuel: Use apps or websites that show you the most affordable places to fill up in your area, helping you save money on fuel.

  • Maintain proper tyre pressure: Ensure your tyres are inflated to the recommended level. Underinflated tyres create more rolling resistance, leading to increased fuel consumption.

  • Keep your car clutter-free: Removing unnecessary items from your car reduces weight, which can improve fuel efficiency.

  • Remove roof racks and accessories: When not in use, remove roof racks, cargo boxes, or bike holders as they create aerodynamic drag and impact fuel efficiency.

  • Plan your route and use a sat nav: Avoid rush hour and busy roads by planning your routes in advance. Using a navigation system can help you find the most efficient routes and prevent getting lost or missing turns.

  • Minimise air conditioning usage: Running the air conditioning increases fuel consumption. Use it sparingly or opt for natural ventilation whenever possible.

  • Stick to the speed limit: Driving at high speeds significantly increases fuel consumption. Stick to the speed limits and maintain a consistent pace to maximise fuel efficiency.

  • Avoid carrying unnecessary weight: Driving with a lighter load reduces fuel consumption. Keep your tank half-full rather than driving with a full tank if possible.

  • Drive smoothly and avoid aggressive driving: Aggressive driving behaviours like rapid acceleration and harsh braking can significantly increase fuel consumption. Drive smoothly and maintain a steady speed whenever possible.

By implementing these practices, you can improve your car’s fuel efficiency and reduce overall running costs.

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Compare now

Don’t forget that comparing and switching insurance providers is another effective way to save on your car’s running costs. By comparing car insurance quotes, you can find the right deal that offers competitive rates and suits your specific needs. Take the opportunity to compare now and potentially reduce your car insurance expenses.

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