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
Feb 10, 2022

The cost of a car is about far more than its price tag. For a start, buying a car with cash represents a totally different outlay than if you go with a finance option. Then you have to think about how much the car will cost to run, you'll need to take into account fuel, insurance, tax and maintenance costs before truly understanding how much money you'll need to spend it.

If you plan to buy the car and then sell it at a later date, that car is also likely to depreciate during the time you own it, which means it will be worth less to the person buying it than what it was when you bought it, so again, you'll be losing money during that transaction.

If you're keen to understand exactly how much a car will cost you, we have some information that you may find useful, including the difference in what you can expect to pay between a cash buy and a finance purchase. Read on for all the details.

Total cost of car ownership

Once you've bought the car, you can expect to have to pay for fuel, insurance, road tax, and maintenance. While you may also want to take depreciation into account if you're planning to sell on a car you've bought outright.

If you're planning to take out a finance deal, you'll have to pay close attention to your monthly budget, as things like fuel bills will be a recurring expense, and you'll need to ensure your bank balance can cater for that on top of your monthly payments.


The cost of your car insurance policy can vary greatly depending on which car you buy, where you live, and even your job title. Take time to research how you can chip away at that insurance premium, whether that's by aiming for a car in a cheaper insurance group, or by carefully picking a job title that offers a lower cost. Things like parking on a driveway will also help to reduce your premium.


Official mpg figures help you to compare fuel costs between cars, but they are only a rough guide, especially if you're looking at an older car with outdated and notoriously inaccurate measuring tests. More recent models will have undergone more stringent and accurate WLTP tests, which offer a much more dependable fuel economy figure.

Diesel cars are generally considered cheaper to run thanks to their superior fuel economy compared to petrol alternatives, although diesels have their own problems to worry about thanks to recent restrictions on their use around some city centres thanks to their harmful emissions.

The best fuel economy can be found with hybrid and electric cars. Electricity is much cheaper than fossil fuels, but you'll need to ensure you're charging a plug-in hybrid car regularly to reap the benefits of its electric offering. We've put together a handy guide comparing the running costs of petrol and electric versions of the same 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. Car tax is generally related to the emissions rating of a car. Those producing more emissions will be hit by higher tax bills, although there are exceptions to the rule.

Servicing and maintenance

Servicing and MOT inspections are essential: packages offered by many manufacturers help you to budget. Making use of manufacturer warranties can help to save you money if something does go wrong, so it might be worth looking at cars covered by much longer warranty periods. Some manufacturers offer warranties of up to five or seven years.

How finance options affect the cost of ownership

If you’re paying for a car on Personal Contract Purchase (PCP) or Personal Contract Hire (PCH), your monthly payments already effectively 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 your own money – then you’ll need to factor depreciation into 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 on 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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