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 15–35% of its value in the first year and around 50–60% 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.