When it comes to owning your own set of wheels, we all know the most significant cost is buying or leasing the car. And we also know about the other major costs involved – MOT, insurance and fuel − but have you ever added it all up?
A recent study has shown that running a car can cost more than £4,000 a year – that’s 15% of the average annual salary. That’s an incredible amount of money to consider in your monthly outgoings and, most likely, an amount you’ve underestimated.
Here we run down the most expensive costs you need to consider when you own a car.
Finance / leasing payments
Very few of us can buy a car outright, with most of us choosing to lease a car or buy it on finance. Around 90% of the 2.3 million new cars sold in Britain in an average year are paid for using financing products, and cost the average motorist around £2,358 a year.
Leasing cars is even more expensive, with the average annual cost rising to £2,617. Whether you decide to lease a car, buy it on finance or with a credit card, it’s important to make sure that you’re comfortable with the repayments before you take on the responsibility.
Fuel
How much you spend on fuel depends of course on whether you drive your car to work and how far you travel, but motorists can expect to spend around £67 a month on average on their fuel costs. And despite the burgeoning popularity of electric cars, one in ten drivers spend more than £200 a month on fuel!
If you’re looking for ways to save on your fuel costs, consider car sharing with a colleague who lives near to you, taking the bus or train to work on a few days, or even cycling.

Insurance
The third-biggest car-related drain on finances is your insurance. This can vary greatly according to your age, previous claims, any points on your licence and where you live, but it’s estimated that drivers spend £40 per month on average on their insurance.
When it’s time to renew your insurance, don’t just accept your renewal quote from your current insurer, as you’ll almost certainly get a better deal by shopping around. You could also consider getting a dash cam to cut the cost of your premium.
MOT
There’s no getting around your yearly MOT. Once your car is over three years old, it must be checked annually to make sure it meets road safety and environmental standards, and it is an offence to drive a car without a valid MOT.
The maximum amount a garage can charge for an MOT is £54.85. Some garages will offer you a discount if you book your annual service and MOT at the same time.
Servicing and repairs
At around £125, a service is a significant chunk of your budget. But an annual service is always recommended and shouldn’t be neglected as it includes essential checks and can spot problems before they happen, saving you money in the long run.
You may not budget for car repairs, but they can be very expensive and are an unwelcome surprise if you’re not financially prepared. So, try and put some money away each month to cover such eventualities.
The rest
Last up come the seemingly insignificant things with not-so-insignificant costs. They could include warranty payments (if you’ve taken out extended cover), parking charges, breakdown cover and toll charges. Once you’ve considered all of these, it becomes clear just how expensive owning a car can be.
If you’ve underestimated your car’s running costs, now’s the time to sit down and work out what it’s really costing you. Go through your bank statements for a year or use an online car costs calculator to help. If you find out your car is costing you too much money, you’ll have to try and work out how to limit some of your costs, as we’ve talked about above, or cut back in other areas of your life.