What Is The Cost Of Owning A Car In The UK?

Are you one of the 65% of Brits who don’t know how much they’re paying to run their car? Our exclusive survey has revealed that it costs an average of £3406.80 a year to run a car in the UK – or £5744.40 for those with car finance. Use our car costs calculator to calculate your car costs.

John Ellmore 13 November 2020

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With our car costs calculator you can calculate your monthly car running costs to see if your car is affordable, and compare it with what the average person pays in the county you live in.

73% of our UK representative sample own a car. Of those who owned a car, 59% bought their car outright, while 12% bought their car using car finance. These stats were revealed by an exclusive UK population representative survey of 2,000 UK adults commissioned by KnowYourMoney.co.uk.

What our survey reveals - the average running cost of a car in the UK

Almost two thirds, 64%, of car owners say their vehicle is the most expensive outgoing in their life after their rent/mortgage.

65%

of car owners say their vehicle is the most expensive outgoing in their life after rent or their mortgage payments

However, 65% admit they do not know exactly how much it costs to run and maintain their car each year.

Our survey revealed:

The average annual cost of owning a car in the UK comes to £3406.80 for those who do not have car finance – for those that do, the figure rises to £5744.40.

But there is a lot more to consider once you get down into the details. Our survey reveals lots of illuminating facts about the costs Brits pay to run their cars and the discrepancies between us.

Gender imbalance

Men seem more willing to spend a lot more on buying and maintaining their car than women.

Discounting car finance, men pay far more on average for their car each year than women (£4344 versus £2418).

Moreover, more men, 33%, bought a new car outright, than women, 20%, and men spend more on average on their cars, especially fuel, £98.70, than women do, £55.30.

Regional differences

But there are further differences to be considered between regions. 69% of drivers based in the East Midlands answered ‘Yes’ to the question “Has the price of running and maintaining your car risen significantly over the last 5 years?”.

This is the highest percentage of respondents from a region to answer in the affirmative to that question; they, along with people from the North East, 68%, and London, 68%, could benefit from entering their car costs into our car costs calculator to see how they might make savings on the monthly costs of running their car.

The average mileage of drivers differs significantly between some areas of the UK too. The highest average miles driven is by Londoners interestingly. Londoners drive 11,283.1 miles on average annually, whereas the fewest miles driven each year is by drivers from the East of England who drive 5,074.9 miles.

Perhaps the high figure for London suggests car-owning Londoners use their car for longer trips to work, and for holidays in the country or abroad.

Regions with the highest average mileage

  1. London – 11,283.1 miles
  2. South East – 9,306.1
  3. East Midlands – 8,031.0
  4. Wales – 8,014.2
  5. West Midlands – 7,926.1

The average cost to run a car varies by region, with London, being the most expensive at £496.85 a month. The addition of the congestion charge might factor in here, while Wales comes in as the cheapest place to run a car in the UK at £159.10.

The average monthly cost of insurance, meanwhile, is highest in London at £83.10 compared to the lowest in Wales – just £42.90.

How does age impact the miles driven?

The average UK driver is on the road for 7,745 miles a year. But young people drive a lot more than their older counterparts. People in the 18-35 age bracket bring up the average mileage of Brits, driving 10,056 miles each year in comparison to 6,120 for those over 55.

How can income affect car running costs?

Many sources quote that you should spend no more than 20% of your income on your car.

"It is generally recommended that you spend no more than 10-20% of your income on running your car. However, this is only a rough estimate so each person should take the time to work out what they can realistically afford themselves.


"The calculator will help you to see what you currently spend on your car, and this can act as a starting point for you to create a budget for your total car outgoings. Having a clear budget should make it easier to comfortably manage your car costs alongside your other bills and expenses, but don’t forget to put a bit extra aside to cover any dreaded emergency repairs so you’re not left out of pocket by unexpected costs!"

John Ellmore, Co-Founder and Director, KnowYourMoney.co.uk

Our survey was representative of a number of different salary brackets: up to £20,000, between £20,000 - £50,000, from £50,000 - £80,000 and above £80,000.

39% of those earning up to £20,000 said they didn’t own a car, perhaps due to their modest salary; this is the largest group which said they didn’t own a car. While 15% of those earning up to £50,000 said they didn’t own a car, 24% of those earning £50,000-£80,000 didn’t own a car and only 1% of people earning above £80,000 a year decided not to own a car.

How else is salary linked to car ownership? Well, the decision to choose car finance plans seems to be common across all salary brackets, which makes sense considering the costs of buying and running a car today. 7% of those earning less £20,000 use car finance, while 18% of drivers earning over £80,000 choose to take out a finance agreement.

When it comes to buying a new car, high earners are the most likely to buy a brand new car outright with 59% reporting doing so, while only 16% of people earning £20,000 or less can say the same.

However, the lowest income bracket are the second most likely group to buy a second-hand car outright with 35% reporting doing so. They are pipped to the post by those earning up to £50,000, with 38% of this group reporting that they bought a used car outright.

The cost of repairs

19% of car owners have taken on debt for services and repairs. Younger people in particular are having to fork out more for repairs; 44% of car owning millennials have taken on debt to pay for a service or repairs to their car in the last 12 months.

19%

of car owners have taken on debt to pay for a service or repairs to their car in the past 12 months

It is therefore important to set aside a budget for unexpected expenses, especially for older cars which may be less reliable.

Car warranty plans are also available to help keep costs predictable, though be sure you know what is and what isn’t included in any plan.

22% of people surveyed are missing a key money saving trick, as they do not use comparison websites to compare car insurance deals when their policies come to an end.

So what are the average costs of running a car?

The highest monthly costs reported by our respondents were car finance repayments and insurance. The average car finance payment from all respondents was £194.80 per month, with men spending £215.70 and women spending £173.30.

In terms of insurance, the average payment was £53.40 a month, men paid more again, £64.10 per month, whereas women pay £41.90 on average. Unsurprisingly the age group that pays the highest insurance premiums each month is the 18-34 age group, shelling out a whopping £82.10 a month.

On the lower end of the spectrum, car drivers aren’t spending so much for MOTs, breakdown cover, parking and congestion fees.

41% of people surveyed said they dread their yearly MOT because it can often result in a sizeable bill. Despite this, the average annual cost of an MOT for motorists from our survey is £5.50 per month so, barring expensive repairs, an MOT is a fairly insignificant expense for most drivers.

On average drivers pay £34.50 for parking and £28.10 on congestion fees.

How to calculate your monthly car running costs

If you’re one of the 65% who don’t know how much you’re paying for your car, and you’re shocked by some of the results that you’ve seen from the survey, then maybe you’re paying more than you should be.

Our car costs calculator helps you to calculate the monthly costs of running your car and the budget you’ll need to account for these costs. We’ve also got some tips on how you can reduce your costs.

By entering all your main outgoings – monthly car payment, fuel cost, insurance, road tax, MOT, maintenance and breakdown cover – our calculator will work out the monthly budget needed for running your car.

Fuel costs are broken down into the monthly amount you pay for your fuel needs. Enter the details of what you usually pay for a litre of petrol at your chosen garage, then the calculator will multiply this cost by the efficiency of your car, specifically the miles per gallon your car achieves.

The calculation used looks like this:

Monthly fuel cost = ((fuel cost per L X L per Gallon) X (annual mileage / MPG)) / 12

This calculation is the same for diesel and petrol cars.

You’ll then enter your MOT costs; bear in mind that MOTs are not needed for cars less than three years old. The maximum amount you’ll pay in 2020 is limited to £54.85, but you can save on costs by hunting around for a good deal, as many garages will charge less than this.

Road tax rates vary based on engine size, carbon dioxide emissions, and when the car was registered. Diesel cars which don’t meet Real Driving Emissions 2 (RDE2) standards for nitrogen oxide emissions have to pay a higher rate of road tax. You can find out how much you need to pay for your particular car at gov.uk.

Another cost to factor in is the money you spend on maintenance and/or your vehicle’s warranty plan. If you know exactly how much you spend here each month enter it into the calculator; if not, give your best estimate.

A simple way to budget for your car maintenance needs is to divide the total costs you paid for car maintenance the previous year and divide that by 12 to get the monthly cost you’ll need to pay next year.

The age of your car and the amount of mileage you have racked up will contribute to your maintenance costs, so be sure to factor this into your maintenance kitty.

How to calculate the total costs of car ownership

The calculator only covers the monthly running costs of owning a car in the UK. This will give you a close approximation of the total cost of owning a car, but there’s a crucial factor you need to research to get the full picture.

That factor is depreciation. The simple fact is that all cars lose a significant amount of value as soon as you drive off the forecourt. In fact, most cars will lose up to 50% of their value in the first three years of ownership.

A well maintained car with low mileage will hold its value the best, but according to the Money Advice Service a car, depending on its model, will lose between 15-35% of its value in the first year of ownership.

Cars which depreciate the most

More information about the cars that depreciate the most can be found here.

Cars which depreciate the least

More information about the cars that depreciate the least can be found here.


To work out how much your car will depreciate you simply need to know the current resale value of your car and compare this to how much you paid for the vehicle.

Buying cars that hold on to their value better can save you money in the long run when it comes to selling. However, you still need to make sure you can afford the monthly running costs. There’s no point buying a car you can’t afford in the short term on the reasoning that it will hold onto its value in the long term.

It’s possible to minimise depreciation on any car. The two most obvious ways of going about this are:

  1. Keeping a well maintained car
  2. Limiting your mileage

You can also minimise your car’s depreciation rate by looking after it as the manufacturer recommends, keeping receipts of repair, using manufacturer-recommended parts, refraining from modifying your car and finally by keeping it as close to its original condition as possible.

How to reduce your car running costs

If you’ve calculated the monthly cost of running your car and you’re shocked by the results, you will want to find ways to reduce your budget.

1. Shop around for insurance deals

As discussed, 22% of people do not shop around for other insurance deals when their policy comes to an end - shopping around is one of the best ways to get a better deal.

2. Find an insurance deal with lower premiums

If your current car is too expensive to run, look into lowering the insurance premiums you pay. You could do this by getting an insurance policy with a black box to track your speeds, as this could gain you access to cheaper insurance deals. You might also look to compare the current deals available from a range of providers, to ensure you’re getting your money’s worth.

3. Look for a cheaper breakdown cover deal

You can also look to change your breakdown cover deal; find out how to save money on breakdown cover membership.

4. Refinance your car finance arrangement

If you bought your car outright or are currently on a car finance deal, you could consider selling your car and refinancing to a deal with lower monthly payments and / or better fuel economy.

5. Buy a cheaper model of car to reduce your insurance premiums

Buying a cheaper model of car can also lower your insurance premiums, so do look into that if your insurance costs make up the bulk of your monthly car running costs.

6. Pay annually for car insurance

You could also consider paying annually for your car insurance rather monthly as this may save you money, but ensure you factor this lump sum payment into your car running costs.

7. Consider buying a more fuel efficient car

If the cost of fuel is one of your highest expenses you might benefit from practicing fuel efficient driving tips or purchasing a car with better fuel economy.

8. Consider the mileage you drive

Finally, consider whether your car is suitable for the mileage you drive. For example, diesel cars are generally more fuel efficient and may be better suited for high-mileage drivers than a high-performance car or even a standard petrol car.

It’s easier than you think to save money on your car. It all starts with knowing how much you’re spending and on what. So why not use our car calculator to get clarity on how much you spend each month?

About the research

The market research was carried out between 24th and 28th July 2020 among 2,003 UK adults via an online survey by independent market research agency Opinium. Opinium is a member of the Market Research Society (MRS) Company Partner Service, whose code of conduct and quality commitment it strictly adheres to. Its MRS membership means that it adheres to strict guidelines regarding all phases of research, including research design and data collection; communicating with respondents; conducting fieldwork; analysis and reporting; data storage. The data sample of 2,003 UK adults is fully nationally representative. This means the sample is weighted to ONS criteria so that the gender, age, social grade, region and city of the respondents corresponds to the UK population as a whole. 1,460 of the respondents owned a car.

Disclaimer: Information in this article was correct at the time of publication. Whilst intended to be informative it does not constitute as advice. Readers should always fully check the T&C's of any financial agreement based on individual financial circumstances.





About the author:

John Ellmore is a director of NerdWallet UK and is a company spokesperson for consumer finance issues. John is committed to providing clear, accurate and transparent financial information. Read more

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