How much does the average car cost to run per year?

When it feels like the price of practically everything is rising at a rather alarming rate, motoring is a cost consideration that forms a big part of everyday budgeting. 

Getting from A to B in a car can impact our pockets in several different ways; from running costs that include fuel and servicing, to the standing costs of car ownership, such as vehicle tax and insurance. 

With the cost of living remaining a hot topic in the UK right now, knowing the average cost of running a car has never been more important. Whether it’s insurance premiums or the money you part with on the petrol forecourt, here at Octane Finance, we’re taking a look at the average cost of running a car in the UK. 

How much does car fuel cost? 

Fuel is expensive, so the cost of your daily commute is ever-increasing in price. The amount you spend per month and per year on fuel heavily depends on whether you drive a petrol or diesel vehicle, what type of driving you do, and how many miles you cover. 

In 2022, fuel prices have risen considerably, with the price-per-litre hitting an eye-watering £2 at the pumps! Currently, the cost of filling a 55-litre family car with petrol stands at around £100; and diesel is at a similar price. 

Whilst energy costs are also a bit of a raw nerve at the moment, electric cars are still a great way to control what you spend on the way you power your car. The existence of smart chargers makes it easier to charge your car at a time of the day when energy costs the least. With petrol and diesel prices showing no signs of slowing down, an electric car might be something to consider if you’re cost-conscious. 

How much does car insurance cost on average?  

Car insurance is a legal requirement in the UK, but unlike many of your car’s running costs, you can usually choose to split your premium into monthly payments instead of paying in one big chunk. 

According to moneysupermarket.com, the annual cost of car insurance went up by £30 in the last three months of 2021, taking the average cost of comprehensive cover to £444 per year. This, however, dropped again in the first three months of 2022, sticking at around £416. 

The average annual car insurance price has fluctuated around this price for a few years, and the increase last year can, in part, be attributed to the increased amount of cars on the road following the Covid-19 pandemic. This makes the risk of an accident, and therefore a claim, more likely. 

As the minimum level of cover required, third-party insurance will be cheaper than comprehensive, though it will only cover damage or injury to a third party as a result of an accident you’re involved in. Your car wouldn’t be covered, and neither would any medical costs if you were injured. 

How much is car tax? 

Officially called Vehicle Excise Duty (VED), this type of tax is required in order to keep your car legally on the road. For the first year of the vehicle being registered, the tax you pay varies depending on the emissions that the car produces, and from then on it’s set at a standard rate. 

In the 2022-2023 budget, the standard rate of vehicle tax for a car registered after 2017 increased by 6%. This means that the amount you’ll pay on vehicle tax annually after the first year is £165. 

How much are MOT and service costs?

It’s recommended that you service your car in accordance with the manufacturer's schedule, which is generally every year. Plus, it’s usually the case that every 6,000 miles the car should have an interim service, every 12,000 miles a full service, and every 24,000 a major service. This is to keep all the moving components of your car in good working order, and it can prevent costly repairs in the future too. 

The average cost of an annual service for a typical family hatchback will set you back around £150-£200, whereas a larger car is likely to be around the £400 mark. Luxury cars will cost even more to service, with prices ranging up to £1,000 and beyond! 

MOTs, of course, are a legal requirement for cars over three-years-old, and the cost of these is more straightforward in terms of price. An MOT to assess whether your car is still roadworthy in its current condition is set at £54.85, though garages can choose to charge less if they wish. 

Extra car costs to consider 

Owning a car can come with some pretty unpredictable bills sometimes, plus some extra charges that can be a factor depending on your circumstances. Issues can crop up with your car at any time that require repair, you may need to regularly pay to park near your home, toll or congestion charges might form part of your regular commute, and you may wish to invest in breakdown cover. Then there are wear and tear items such as tyres, brakes and wiper blades which need changing too.

Budgeting for these regular or unexpected costs will always make paying them less stressful, so be sure to factor them in when working out how much driving a car is going to set you back both monthly and annually. 

Finance your car to spread the cost 

The initial purchase price of a car is a lump sum that you may not have considered as part of your running costs. However, there are ways to spread the cost; you could choose to finance your vehicle - something we know all about here at Octane Finance! With a number of options available to you, each allows you to pay a monthly amount and may make the car you want more affordable. 

Discover more about the options available to you in our dedicated Car Finance section and access our free online Finance Calculator tool to find out how much you could be paying.