Total cost of running a car

A car's price doesn't tell you how much it will cost you to own: here's how to calculate the total cost of running a car

BuyaCar team
Jun 30, 2018

You can't work out the cost of a car just by looking at its price.

The amount that it's selling for doesn't really tell you how much a car will cost you to run. Fuel use, insurance, servicing all have an impact, but the most important factor is the value that the car loses over the time you own it - the depreciation. It’s the difference in the price that you buy it for and the amount that you can sell it for, and it can make a huge difference to the cost of owning a car.

For example, you might wonder how anyone could justify buying an Audi A4. It’s the same size as a Vauxhall Insignia, but an automatic diesel model costs almost £8,000 more than the equivalent Vauxhall.

Each year, though, crowds of buyers opt for the Audi. It’s more economical than the Vauxhall, which keeps fuel prices and car tax down, but most importantly, it’s popular with used buyers, who are willing to pay a high price for it. This means that the Audi A4 owners can sell their car on for much more than Vauxhall Insignia owners. So you’re left with a situation where the car that’s £8,000 more expensive is cheaper to own than the budget option. Which begs the question as to how anyone can justify buying the Vauxhall.

Calculating the full cost of running a car is quick and simple: here’s how.


Total cost of ownership

Working out the cost of running a car is easiest if you’re taking out finance on either a Personal Contract Purchase (PCP) or leasing (also known as Personal Contract Hire or PCH) agreement.

You just have to add the cost of your monthly payments to the rest of the elements:

The value that the car loses during the time that you own it is known as depreciation. This will usually be more than all of the other costs combined.

Insurance By choosing the right car, with the right equipment, you could save hundreds of pounds a year on your insurance.

Fuel costs Official mpg figures help you to compare fuel costs between cars, but are only a rough guide, as they are notoriously inaccurate. it;s better to find the real-world mpg of your car.

Car tax
If you're buying a used car, then you may well save by buying one that was first registered before 2017 when the car tax rules changed.

Servicing and maintenance Servicing and MOT inspections are essential: packages offered by many manufacturers help you to budget, 

If you’re leasing a car on Personal Contract Purchase (PCP) and Personal Contract Hire (PCH) then a lot of the hard work is done for you because your payments cover the car’s depreciation.

In some cases, lease deals also include servicing costs and tax. 

For other types of finance, including Hire Purchase (HP) or if you’re buying the car with a loan or our own money, then you’ll need to work out the total cost of ownership yourself.

The simplest way of doing so is to use the calculator provided by cap-hpi, which has analysed the cost of owning every car in the road for the past 37 years.

Once you’ve selected the cars that you want to compare then you’ll need to add in the following details:

  • Price 
  • Insurance
  • Annual mileage

The calculator will also estimate servicing and maintenance costs as well as car tax. 


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