How much does a car really cost?

We all get sold on low APRs and low deposits for new cars. Second hand car sellers like to cut the overall purchase price of the car to get our attention so every car on the forecourt’s attractive but what are the real costs of ownership?



Insurance, tax, petrol, depreciation and MOT costs are all running costs that motorists have to face. Some are daily, others are annual charges but the real cost of ownership is an equation that’s a bit more involved that those costs mentioned here.


You’ll need to take the purchase price of the car, then figure out how long you’ll keep the thing. With depreciation to deal with in a new car, you might find that exchanging it pretty quickly (within 3 years) will allow you to maintain a very similar monthly charge for the vehicle through a PCP deal. If you’ve bought the car outright, you won’t need to worry about depreciation until it comes time to sell the thing. Basically, if the car’s not too expensive to run, insurance and service, the longer you keep it the better because depreciation rates slow down year on year.


One of the costs that people ignore when they plan to buy a car is the cost of fuel. Ok, canny buyers check the car’s MPG rate but do they really calculate how much their car will cost them in fuel? It’s a difficult one to work out exactly as the mileage your car returns is not an exact science and the price of fuel fluctuates.


If you’re buying a new car, get the service pack. This is normally a three year deal that covers all the routine servicing your car will need. Of course, if it needs new tyres or something else that’s outside the routine changes for the annual service, you’ll find a charge when you pick up the car, but if everything goes to plan, you won’t pay any more than the upfront costs, which with a new car can often be included in your monthly charge (although you might find that the cost has interest attached to it if you bundle it in with your car purchase).

Other stuff

Car tax is another cost. That's not one that you have any say over though. Car insurance is an obvious charge so it’s not one that most drivers miss when they buy a new vehicle. There are so many variable with insurance that we can’t go into much detail. With price comparison sites you can get a good idea of what a car will cost before you buy it.

Car calculator

A tool like the car cost calculator found at moneyadviceservice.org.uk/en/tools/car-costs-calculator should answer your question about the affordability of the car you’re interested in purchasing.

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