Running a Car

What does it cost to run a car? A lot of money will be the widespread and heartfelt cry. However, like with many items in the household budget, getting to grips with the costs of running a car and ensuring that they remain manageable is a relatively straight forward exercise. Through breaking down expenses into bite-sized chunks you could get a clearer idea of just where all the money is going and it should become easier to identify those areas where any savings can be made.

According to the latest figures (published by internet-based MSN News on the 20th of October 2008), running a car costs 16% more than it did in 2006, having risen by 13% during 2008 alone. Understanding the different elements that go into making such a steep rise could help motorists manage the increase and continue to use their vehicles regularly and effectively.
So, what are the principal elements involved in the cost of running a car?

Fuel

The rising cost of fuel during 2008 is probably the single biggest factor for the increase in motoring costs. What this means for you, of course, will depend on the fuel consumption of your vehicle and what you need to pay for the petrol for each mile driven. This can be calculated relatively easily by filling the tank, turning the mileage counter back to zero and checking the mileage when the tank needs filling again. Because the reading will vary according to how, when and where you have been driving, this exercise would need to be repeated a few times to get a more accurate average cost of fuel per mile. If you also know your average annual mileage, it's then a simple matter of calculating how much you're spending each year on fuel.

Managing the costs is a fairly straight forward question of comparing the price of petrol per litre at the pumps in your area.

Insurance

Figures suggest that the overall cost of car insurance has risen by just over 10% in the past two years. What you actually pay could, of course, depend on personal circumstances (such as your age, gender, occupation and where you live), but also your insurance record of past claims and any driving convictions, no claims bonuses, and the insurance category for the type of car you drive.

Despite the overall increase in insurance costs, it's still possible to obtain competitive quotes. For example, you can compare car insurance premiums as well as policy features and benefits by using our online car insurance comparison service.

Servicing and MOTs

This is an area that has also seen significant increases, with servicing costs rising by an estimated 17.5% in the past two years and MOT tests by more than 20%. Changes to your driving habits and a generally more careful use of your vehicle might be able to reduce the actual costs of each service, although there is little you can do, of course, about the price you need to pay for the MOT test or, indeed, the various taxes on motoring generally (the latter are estimated to have risen by a total of 32.5%). The taxes you pay on your particular vehicle, will depend on its size, performance and energy efficiency.

Depreciation

For many people, this is a "hidden" cost of running a car, yet it's where most of the money goes. With every month you own your vehicle and with every mile you drive, your car is depreciating in value. Over just a couple of years, of course, this can amount to several thousands of pounds, depending on the overall value, age and type of car you own.

In terms of the cost of running a car, however, it's important to bear in mind that some cars will depreciate in value more quickly than others and some will do better at holding their value for a longer period of time.

Jon McGovern is from Tescocompare.com, the insurance comparison site where you can compare car insurance policy features and prices.

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