Britain’s economy is very flat as we head toward the end of 2023, without a lot of good news on the horizon. The cost of living crisis still looms large, and it is still more important than ever to double-check that you can afford to run the car you are looking to buy.
The Car Expert has tallied up these monthly costs, and they may be more expensive than you think. Using data collected from our technical partner Clear Vehicle Data, insurance comparison site Confused.com and financial analytics company NimbleFins, The Car Expert estimates that motorists spend an average of £245.76 each month simply on running a petrol or diesel car each month – and that doesn’t include purchase costs or finance payments.
This is an increase of £28 a month on the same bills last year – a 13% increase in 12 months.
Over a year, this means the average car costs about £3,000 to run. While many of us have been keeping an eye on the cost of fuel at the pumps in the last year, NimbleFins reports that UK car owners spend just under £120 on fuel a month on average, which is the same figure they reported last year.
Obviously, fuel is the cost that fluctuates the most each month, as most other costs are either fixed or don’t vary significantly. Prices were very high in Summer 2022, at nearly £2 a litre, then gradually fell for most of the last 12 months to less than £1.40 before starting to rise again in the last couple of months.
Instead, the recent rise in running costs is mostly due to the insurance sector. Analysing its database of offers from its trusted insurance providers, Confused.com says that insurance premiums are 58% higher on average compared to this time last year.
| Item | Average monthly spend |
| Fuel | £119.58 |
| Car insurance | £77.00 |
| Routine maintenance and servicing | £22.75 |
| Vehicle excise duty (road tax) | £13.75 |
| MOT | £4.58 |
| Breakdown cover | £1.50 |
| Parking permits and tickets | £3.67 |
| Fines | £0.35 |
| Cleaning and other costs (like garage rent) | £2.58 |
| Monthly average total (excluding purchase costs) | £245.76 |
NimbleFins adds that some upkeep costs for car owners, like cleaning products and garage rent, have become cheaper over the last six months as inflation has started to fall. Other costs, like annual road tax and MOT charges are unchanged.
Why are insurance costs rising?
Based on its car insurance database of over six million quotes in just the last three months, Confused.com reports that insurance premiums have increased by around £148 on average since the summer.
The company adds that this is the sharpest increase since it started recording insurance prices in 2006, and that all regions in the UK are seeing the highest prices on record.
There are several reasons for this:
- New car prices have been steadily increasing, which means that premiums have increased to cover the values of the vehicles insured
- Used car values have been at historically high levels, which means that insurers have had to pay out much more in the event of a write-off
- Many new cars come with the latest driving assistance technology, which can cost the insurer more to repair or replace
In addition, Confused.com suggests that the rising popularity of electric vehicles (EVs) has also had a significant effect. The company concludes that:
- EVs are usually more expensive than their petrol or diesel equivalents, which will in turn raise insurance costs
- EVs can be more expensive to repair (although this is not universally true)
- A shortage of trained EV repairers and body shops means that cars are taking longer to repair, so insurance companies are spending more money on courtesy vehicles for their customers
- EVs generally have quicker acceleration and speed than fossil-fuel vehicles, so could appear riskier to insurers
- Used electric car values have been even higher than petrol/diesel cars, which in turn keeps insurance premiums high
What you can do to keep costs at a minimum
Managing your insurance renewal
If you have just received an expensive renewal quote, the best first step is to use a price comparison site to ensure you’re not paying more than you need to, and it’s quite likely that you will be able to get a cheaper quote from elsewhere.
While it might take a large chunk out of your finances in the short term, paying an annual lump sum for your car insurance is the cost-effective option, should you be able to afford it. This is because insurance companies often charge interest for spreading the cost of your cover over the year.
To lower your insurance further, you could also increase your voluntary excess, but make sure you can afford to pay that sum if you need to make a claim. You might be tempted to lower your estimated mileage to keep costs down, but the best thing to do is be honest and accurate. You will be charged down the line for going over the estimate you gave, and insurance companies can also see very low mileage estimates as a risk too.
Actions to save at the petrol station
Ever-increasing fuel costs are the largest expenditure you will face from month to month, so any savings you can regularly make at the petrol pump can really go the extra mile.
To keep your car as fuel efficient as you can, you should make sure your car’s engine well maintained, and that your tyres are properly inflated. Drive in the highest gear possible to conserve fuel, avoid accelerating or braking too hard, and also keep your steering as smooth as possible.
Many drivers also travel long distances to find the best petrol pump deals, but make sure you weigh up the cheaper fuel prices with the distance you need to travel to the petrol station. Check out our full set of fuel-saving tips here.
Servicing plans – check the fine print
A service plan can be a good way to spread your car’s maintenance expenses over the year, but you need to look carefully to ensure that the terms and conditions suit your needs. You might spend more overall but in more manageable monthly chunks rather than in one big hit each year.
Some plans are quite affordable, but remember to check for limitations in the fine print, such as a maximum value for the car’s age and/or mileage. Some providers offer a multi-year plan but lock you into that specific dealership for servicing, which is no good if you move house to the other side of the country.
Keep some cash handy for unplanned expenses
As we’ve said in our Ten golden rules for buying a car: Any car can go wrong at any time with expensive consequences, so you need to make sure your wallet can cope with it.
It doesn’t have to be a breakdown or failure – it could be a puncture or damaged wheel from hitting a pothole. It could be a broken window from a vandal or thief. It could be that you accidentally put the wrong fuel in your tank during a moment’s inattention, or any sort of unexpected drama.
If you’re so financially stretched that you can’t deal with these inevitable demands on your bank account, you are very likely to hit money troubles at some stage of your car ownership. Instead, you might want to look for a cheaper (or cheaper to run) car.
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