Ask someone what their car costs and they'll usually quote the fuel. But fuel is rarely the biggest expense — it's the cost you can see, sitting next to ones you can't. Once you add insurance, tax, servicing and the value the car quietly loses every year, the real figure is often double what people assume. Here is what a car actually costs to run in the UK, and where the money really goes.
- Fuel is usually not the biggest cost — depreciation often is.
- A typical car can cost £3,000–£6,000 a year all-in, including the value it loses.
- The five costs are fuel, insurance, road tax, servicing and depreciation.
- Low mileage doesn't mean cheap — insurance, tax and depreciation are mostly fixed.
The five costs of running a car
Total motoring cost comes from five parts:
- Fuel — the visible cost, driven by mileage, MPG and pump price.
- Insurance — a fixed annual cost whether you drive or not.
- Road tax (VED) — usually the £195 standard rate.
- Servicing and maintenance — routine service, MOT, tyres, repairs.
- Depreciation — the value the car loses each year, often the largest cost of all.
The car running costs calculator pulls these together into one yearly figure and a cost per mile.
Depreciation: the giant nobody sees
A new car can lose 15–35% of its value in the first year and roughly half over three years. On a £20,000 car that's thousands of pounds a year — more than fuel for most drivers. Because you don't write a cheque for it, depreciation feels invisible, but you pay it the day you sell or trade in. It's the single strongest argument for buying a car that's two to three years old: someone else has already absorbed the steepest drop.
Why low mileage isn't cheap
Here's the counterintuitive part. Insurance, road tax and depreciation are largely fixed — you pay them whether you drive 2,000 miles or 20,000. Only fuel and some maintenance scale with mileage. That's why a barely-used second car can still cost over £2,000 a year to keep, and why occasional drivers often save money with car clubs or rental instead of ownership.
A worked example
Take a £20,000 car driven 9,000 miles a year:
Fuel
at 45 MPG and £1.40/litre, about £1,270.
Insurance
say £700.
Road tax
£195.
Servicing and maintenance
say £500.
Depreciation
12% of £20,000 = £2,400.
Total
about £5,065 a year, roughly £422 a month, or 56p a mile.
Depreciation alone is nearly half the cost — and fuel, the thing most people focus on, is only a quarter of it.
The extras that creep in The figures above don't include parking permits, tolls, congestion and clean-air-zone charges, breakdown cover or finance interest. In cities these can add hundreds of pounds a year, so factor them into your real budget.
How to cut the cost
Buy a slightly used car to dodge first-year depreciation, shop around hard for insurance every renewal, keep up with servicing to avoid big repairs, drive efficiently, and check whether you genuinely need the car for the mileage you do. The biggest savings come from the purchase decision — a car that holds its value well can cost far less per year than a cheaper one that depreciates fast.
Frequently asked questions
Including depreciation, many drivers spend £3,000–£6,000 a year on a typical car doing average mileage, with depreciation often the single biggest cost.
Yes. It's the money you lose when you sell or trade in, and for newer cars it usually exceeds the fuel bill — you just don't pay it visibly each month.
Fuel is visible but often only a quarter of the total. Depreciation, insurance and servicing combined usually cost more.
Only partly. Insurance, tax and depreciation are largely fixed, so a low-mileage car can still cost a lot to keep.
Buy slightly used to avoid first-year depreciation, shop around for insurance, service regularly, drive efficiently and watch city charges.
Figures are 2025/26 estimates and illustrative. Use the running-costs calculator with your own numbers for an accurate figure.