The true cost of running a car
Fuel is the cost drivers notice, but it's rarely the biggest. Once you add insurance, tax, servicing and, above all, depreciation, the real cost of motoring is often double what people assume. This calculator pulls it all together into a yearly figure and a cost per mile.
What makes up running costs
- Fuel: driven by mileage, MPG and pump price.
- Insurance: a fixed annual cost regardless of mileage.
- Road tax (VED): usually the £195 standard rate.
- Servicing & maintenance: routine service, MOT, tyres, repairs.
- Depreciation: the value the car loses each year, the largest cost for newer cars.
The cost you can't see on a payslip
A new car can lose 15 to 35% of its value in the first year and around 50 to 60% over three years. On a £20,000 car, that's thousands of pounds a year, more than fuel for most drivers. Buying a two-to-three-year-old car lets someone else absorb the steepest depreciation, which is why nearly-new cars are often the best value.
Why low mileage doesn't mean cheap
Insurance, tax and depreciation are largely fixed, you pay them whether you drive 2,000 or 20,000 miles. 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 car clubs or rental can be cheaper for occasional drivers.
Don't forget the extras
A £20,000 car, 9,000 miles a year
At 45 MPG and £1.40 a litre, 9,000 miles costs about £1,270 in fuel. Add £700 insurance, £195 tax and £500 servicing, plus 12% depreciation on £20,000 (£2,400), and the total is roughly £5,065 a year, about £422 a month, or 56p a mile. Depreciation alone is nearly half the cost.
Common running-cost mistakes
- Only counting fuel. Depreciation and insurance usually cost more than fuel combined.
- Buying brand new for low mileage. If you barely drive, depreciation makes a new car very expensive per mile.
- Ignoring insurance group. Insurance varies hugely by model and can outweigh fuel savings from a smaller engine.
- Forgetting city charges. Congestion, ULEZ and parking can quietly add hundreds a year.