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The annual cost of running a car

If you’re learning to drive or are planning to become a car owner, you’re probably wondering just how much getting on the road will set you back. If you’ve already been driving for some time, you know the various costs involved, but, with so many things to keep up with, it’s easy to lose track of what you’ve been paying for. 

How much you’ll have to pay depends on a number of factors, but, just to give you an idea, the annual cost of running a new £18,000 petrol car is around £2,600 per year – based on you driving 10,000 miles at 45mpg. Driving your own car certainly gives you the freedom to get from A to B whenever you like, but it does come at a cost.

What are the standing charges?

These are charges you must pay as a car owner, whether you use your car or not. They include:


This is essential if you own a car, unless it’s off the road and declared SORN . You have the choice between comprehensive cover, third party cover, and third party, fire and theft cover. The minimum amount of cover you can legally have is third party cover, which protects other vehicles, property and people, but not yourself or your vehicle. In the past, this was the cheapest form of car insurance, but this isn’t always the case today, as comprehensive cover can actually turn out to be cheaper.

The factors taken into consideration by insurers when calculating how much you should pay for your premium include where you live, the crime rate there, how many years no claims discount you have, whether you’d like additional drivers added to your policy, your claims experience and any prior convictions (both for you and any additional drivers), the car insurance group[1] of your vehicle, and your age, just to name a few.

Car tax

How much car tax you’re required to pay depends on how much CO2 your car produces. For example, if your car has CO2 emissions of between 1 and 50 (g/km), you’ll only pay £10 in car tax when you first register the vehicle. However, car tax rates work like a sliding scale, so, if your car’s emissions are higher than 255 (g/km), you’ll have to pay £2,000.

Whatever your CO2 emission, you’ll need to pay at least £140 per year in car tax, if you own a petrol or diesel car.


Your car’s worth decreases over time, with brand new cars depreciating the most.

Depreciation is the difference between how much you paid for the car when you bought it, and how much you’d be able to sell it for. Cars typically depreciate between 15-35% in their first year, and up to 50% or more over three years. Large, luxury cars usually depreciate more than this.

The good news is there are ways to minimise your car’s depreciation. Check out our top tips to find out how you can do this.


If you used a loan or credit card to pay for all or part of your car, the interest you’ll pay to your credit provider is another standing cost. 

What are the running costs?

These are the costs of actually using the car.  So, if it sits on your drive and you don’t use it, your running costs will be zero. But, the more you drive it, the more these will increase.


This is often your biggest running cost, especially if you drive long distances regularly. How much you pay for fuel depends on how many miles you drive, whether you have a petrol or diesel car, how efficient your car is, your driving style and the petrol station you use - as fuel prices can vary at any given time.

Parking and toll charges

These may or may not apply, depending on where you drive to and on what kind of parking facilities you have available.

MOT, replacement costs and servicing

Unless your car is SORN, younger than three years or older than forty, your car must pass an MOT check every year, and you’ll have to pay to repair any issues that may be flagged during the test.

How much you’ll have to pay can vary greatly, depending on what’s needed. New tyres, for instance, can cost a few hundred pounds for a set, but shopping around can save you money. Buying from a dealer is often more expensive than buying elsewhere.

If you get your car serviced each year, this is another running cost you’ll have to budget for, along with the cost of any parts that may need replacing (tyres, exhaust, battery, light bulbs, etc.).

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