How to Calculate Your Car's Running Costs: A UK Guide

Summary

• Average cost: £3,500-5,000+ per year for a typical car.
• Biggest costs: Depreciation and fuel often account for over half.
• Hidden costs: Don't forget parking, tolls, cleaning, and accessories.
• Cost per mile: Divide total costs by annual mileage for your true running cost.

Many drivers only think about fuel when calculating car costs. But the true cost of motoring is much higher.

This guide helps you work out what your car really costs to run.

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Main Running Costs

1. Fuel

Your largest day-to-day expense. To calculate:

1. Find your car's MPG (check the spec or use real-world figures)
2. Divide your annual mileage by the MPG
3. Multiply by the current fuel price per gallon

Example: 10,000 miles ÷ 40 MPG = 250 gallons × £6.50/gallon = £1,625/year

For tips on reducing fuel costs, see our fuel saving guide.

2. Insurance

Varies hugely based on driver age, location, car type, and claims history.

• Young drivers: £1,500-3,000+
• Experienced drivers: £300-800
• Older drivers/low mileage: £200-400

Always compare quotes and consider the tips in our insurance reduction guide.

3. Road Tax (VED)

Depends on when the car was registered and emissions:

• Pre-April 2017: Based on CO2 (£0-600+)
• Post-April 2017: Flat rate £190/year for most cars (first year varies)
• Electric vehicles: Currently £0 (changing from 2025)

4. MOT

Maximum legal fee is £54.85, but many garages charge less. Due annually once your car is 3 years old.

5. Servicing

Annual or mileage-based servicing keeps your car reliable:

• Minor service: £100-200
• Major service: £200-400
• Dealer servicing: Often 50-100% more

See our car servicing guide for more details.

6. Repairs

Hard to predict but budget for:

• Tyres: £200-600 per set (every 20,000-40,000 miles)
• Brakes: £150-400 per axle
• Battery: £80-200 (every 3-5 years)
• Unexpected repairs: Budget £300-500/year average

7. Depreciation

The biggest cost many people ignore. It's the difference between what you paid and what you'll sell for.

• New cars lose 15-35% in year one
• Then about 10-15% per year after
• Older cars depreciate less in cash terms

A 3-year-old car might depreciate £1,500-3,000 per year. A 10-year-old car might only lose £500.

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Other Costs to Consider

• Parking: £0 to £3,000+/year depending on location
• Tolls: Congestion charges, bridge tolls, motorway tolls
• Breakdown cover: £40-200/year
• Cleaning: £50-300/year (or DIY)
• Accessories: Phone mounts, mats, roof boxes, etc.
• Finance interest: If you're on PCP/HP, include the interest cost

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Running Cost Calculator

Add up your costs using this template:

Cost Category	Your Annual Cost
Fuel	£_____
Insurance	£_____
Road tax	£_____
MOT	£_____
Servicing	£_____
Repairs (estimated)	£_____
Depreciation (estimated)	£_____
Parking	£_____
Other	£_____
TOTAL	£_____

Cost Per Mile

Divide your total annual cost by your annual mileage:

Example: £4,500 ÷ 10,000 miles = 45p per mile

This is your true cost of driving. It's usually much higher than people expect.

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Typical Cost Examples

Scenario	Approx Annual Cost
Small hatchback, 8,000 miles, experienced driver	£3,000-4,000
Family SUV, 12,000 miles, finance	£5,000-7,000
New premium car, city parking	£8,000-12,000+
Older car, low mileage, rural	£2,000-3,000
Young driver, first car	£4,000-6,000 (high insurance)

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Tips for Reducing Running Costs

1. Choose an economical car with low insurance group
2. Shop around for insurance annually
3. Drive efficiently to save fuel
4. Service your car regularly to prevent expensive repairs
5. Buy a car that's already depreciated (3-5 years old is the sweet spot)
6. Consider alternatives for short trips (walking, cycling, public transport)
7. Review whether you need a car at all - car clubs may be cheaper

For more tips, see our guide to cutting motoring costs.

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Common Questions

What's the average cost to run a car in the UK?

Around £3,500-5,000 per year for an average car with average mileage. High mileage, premium cars, or city parking can push this much higher.

Is it cheaper to buy an older car?

Often yes, because depreciation is lower. But repair costs tend to be higher. The sweet spot is often 3-5 years old with good service history.

How do I calculate depreciation?

Check what similar cars are selling for now, then estimate what yours will be worth in a year. The difference is your annual depreciation.

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Final Thoughts

Knowing your true running costs helps you make better decisions - whether that's choosing a more economical car, reducing mileage, or exploring alternatives like car clubs.

Track your costs for a year and you might be surprised at where your money goes.

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