When a friend of mine bought her first car, she did it for the freedom she’d been craving. What she didn’t factor in was the real cost of keeping it on the road.
The figure on the windscreen is only the start. Behind it sits a long list of running costs that are easy to overlook, and it’s only when you understand those properly that you can see whether a car is working for you or quietly draining your finances.
Purchase Price Isn’t Everything
Paying for the car itself is the biggest hit at the beginning, but it’s far from the only cost that follows. How you choose to fund it, whether that’s buying outright, taking out a hire purchase agreement, or signing up to a personal contract purchase, has a huge influence on what you end up paying overall.
Once a finance agreement enters the picture, the headline price becomes only part of the equation. Interest, fees, and the total amount repayable all lift the real cost well above what’s on the sticker. PCP in particular can look deceptively affordable, thanks to lower monthly payments and that large optional final instalment sitting far off in the future. It’s easy to focus on the monthly figure and forget what the agreement actually adds up to over the full term.
And here’s where things become even more complicated. For years, many PCP and HP agreements were sold under discretionary commission arrangements. Most drivers had no idea these existed. Dealers could quietly increase your interest rate and pocket part of the uplift as their own income. It didn’t show up clearly on the paperwork, and it meant your borrowing cost wasn’t determined by risk or fairness.
The result was simple: millions paid more than they should have, without ever realising why.
So, while the car’s price matters, the structure of the finance behind it is what really dictates how much it costs you in the long run.
Insurance, Tax, and Fuel
Every year, I budget for insurance renewal, road tax, fuel, and MOTs.
Insurance alone can vary wildly depending on your car’s type, age, engine size, and driving history. In the UK today, that means making sure you’re comparing quotes and not sticking with a renewal because “it’s easiest.”
Road tax might seem negligible until you’ve changed cars or your vehicle falls into a higher band.
Fuel costs are a constant for me and, with fluctuations in price, they can make a serious dent in monthly budgets. I drive regularly for family and errands, so I know that even small increases in the price per litre or fuel efficiency differences matter.
Maintenance, Depreciation, and Repairs
Depreciation is invisible but real. Even the best-kept car loses value the minute you drive it off the forecourt. If you ever decide to sell or trade it in, that loss becomes clear.
Then there are servicing and repairs. The routine stuff (oil changes, air-filter replacements, tyres) adds up. But unexpected repairs are what really bite: brakes, exhausts, or electrical issues can push you into hundreds of pounds you didn’t budget for. I always keep an emergency car fund because savings apply just as much to motoring as they do to holidays or groceries.
Running Costs Over a Year
To give you a tangible figure, here’s how the cost breaks down for a mid-sized car, driven typical distances.
- Insurance renewal: ~£500.
- Road tax: ~£150.
- Fuel: ~£1,500 (assuming around 10,000 miles per year and mixed driving).
- Servicing/maintenance: ~£300.
- Depreciation: ~£1,000 (a rough estimate).
- Total: ~£3,450 in a year.
That’s nearly £285 per month. Of course, your figure will vary depending on car model, mileage, age, and driving style. But that’s a realistic starting point.
Now, I bet you are thinking that getting an electric vehicle might change this calculation. Unfortunately, the truth is a bit more complicated.
Electricity is typically cheaper than petrol or diesel for the same distance, and you’ll often pay less in maintenance because there are fewer moving parts. But you still face insurance, depreciation, and charger installation (if you rely on home charging).
What always counts in an EV’s favour is its impact on the environment. It offers a cleaner way to travel, and that matters when you’re choosing a car that fits both your budget and your values.
How To Make Running A Car More Affordable
First, choose a car that genuinely suits your life rather than something that looks appealing but strains your budget. The right fit makes a huge difference to long-term costs.
Second, shop around for insurance every year. A renewal quote rarely offers the best value, and a quick comparison usually uncovers a cheaper option.
Third, look after the basics. Proper tyre pressure and steady driving stretch your fuel further and reduce wear on the car.
Fourth, keep a running-cost calendar. I log service dates, MOTs, and insurance renewal so nothing arrives as a surprise and I can plan ahead with confidence.
Fifth, track what you actually spend. Once the real numbers are on the page, you gain a clearer view of where your money goes and which changes will make the biggest difference.
Every pound you spend on fuel, insurance, or repairs comes from somewhere else in your budget, and understanding that trade-off gives you real power. A vehicle can offer freedom, convenience, and a sense of security, but it can also drain your finances quietly in the background if you let it. A car should support your life; never steer it.
