How much does your car really cost to run

Posted by Elizabeth Harrison in Personal Finance on 30 July 2014 - Elizabeth is a Senior Credit Analyst at checkmyfile.

As the proud owner of a 1978 MGB I’m going against my instincts this time and wondering whether an older car is such a good idea after all. Sure, there are definite positives. If your car is classed as a historic vehicle i.e. made before 1 January 1974 then you’re exempt from paying tax. You may find that insurance costs are lower thanks to classic car drivers having a good reputation for looking after their vehicles and driving with care. Compared with the computerised boxes that pass for cars today, which sense your keys from across the car park, decide when the windscreen wipers are needed and help you park, older cars are actually quite straightforward to repair. For one thing, when you open the bonnet you’re faced with the car’s inner workings, not just another box and the problems can be fixed using a bit of knowledge and actual tools rather than another computer. Plus, driving these cars is actually fun and you won’t want to go back to your boring modern cars once you’ve driven one.

On the negative side, although you can pick up a second-hand car for a good deal less than a new car boasting all the latest technology, unless you do your research on the associated costs such as insurance and fuel-consumption and calculate whether or not the car is actually an affordable prospect long-term then you may be surprised by the actual cost of running and maintaining the car. Major repairs aside, your car’s likely to require regular maintenance to keep it running smoothly, petrol consumption will be high in comparison with the more fuel-efficient modern vehicles and insurers may limit the number of miles you’re able to drive each year in order to qualify for certain insurance policies.

But it’s not just drivers of older cars who don’t always realise the true cost of running a car. The Money Advice Service has found that large numbers of us underestimate just how expensive being a car owner can be. Choosing a car based purely on the affordability of the initial price may seem enough at the time but going on initial cost alone is a false economy when a car isn’t a throwaway purchase.

Underestimate the costs to run, insure and repair your car and you may be setting yourself up for financial issues. If the overall annual expense of running the car is far higher than expected, you’re going to have to make this up elsewhere. Many find they have to cut back on spending in other areas and some may even get into considerable financial difficulty as a result of not considering the bigger picture when making the purchase.

And it’s not as if you can just sell the car and make do without. A car often plays an essential part in giving people the ability to earn a wage in the first place and alternatives such as public transport are not always economically viable, as ticket prices continue to increase for an often less-than-reliable service. So if the car’s a necessary expense, it definitely merits careful thought.

The Money Advice Service now offers an online ‘car costs calculator’ to assist here and allows prospective buyers to search particular cars to get an idea of how expensive the cars would be to tax, insure and fuel, as well as taking depreciation into consideration. It’s not much use if you’re looking at an older model - apparently my car’s number plate doesn’t exist - but it’s a good way to check and compare potential cars before parting with your hard-earned money.

So don’t get swayed by futuristic looks and shiny trim. Putting in the time early on and researching realistic running costs should ensure you’re not scuppering yourself at a later date. (And just so you know, I don’t regret buying my car one bit)

The Cost of Incorrect Information on Your Credit Report

Your credit file is compiled from a number of different sources, including payment history from each of your lenders (past and present) and public data as reported by local authorities and courts. The majority of people find that everything held about them is correct, but due to the large amount of information being shared, errors in the information reported can happen, which can lead to issues when you go to apply for credit.

Published on 2 Feb 2018 by Tom Blandford

Full Article

Your Guide to Open Banking

On 13 January, the UK banks embarked upon arguably one of the biggest changes to personal finances since the introduction of computers. Open Banking is aiming to make it easier for banks, lenders and consumers to access and share information, with a view to creating new products and opportunities through innovation and increased competition.

Published on 15 Jan 2018 by Jamie Mackenzie Smith

Full Article

HMRC Bans Credit Card Tax Payments

From 13 January 2018, it will no longer be possible for consumers to use a personal credit card to make a payment on HMRC’s Self-Assessment tax portal. Historically, this has been a popular option as it allows what is often a considerable sum to be deferred.

Published on 12 Jan 2018 by Tom Magor

Full Article

How to Get the Best Deal When Buying a New or Used Car

Buying a new car is both exciting and expensive, but if you know where to look and when, you can grab yourself a bargain. If you take a little time to look into finance or loan deals as well, you can bring down the overall costs significantly.

Published on 11 Jan 2018 by Kevin Pearce

Full Article

Are football clubs exploiting their fans

With Premier League teams under huge pressure to remain in the top flight of English football, the amount lavished on transfer fees and player wages have soared in recent years.

Published on 8 Jan 2018 by Sam Twyford

Full Article

What The 2017 Autumn Budget Means For First-Time Buyers

Wednesday’s autumn budget brought great news to would be first-time homeowners: if you’re buying a home up to the value of £300,000, you won’t have to pay stamp duty for the property. This, the Conservative Party estimate, will benefit 80% of first-time buyers, saving them potentially thousands of pounds on the total cost.

Published on 28 Nov 2017 by Jamie Mackenzie Smith

Full Article

Blacklists - Ten things you probably didn't know

1. Blacklists are not unlawful. No lender is compelled by law to give credit or to give any reason when declining credit. Each may consult several sources of information before making a decision, including any form of list that may exist. Any list containing personal data is automatically regulated by the Data Protection Act 1998.

Published on 9 Oct 2017 by Barry Stamp

Full Article

Is a credit building card a good idea

A credit building credit card is most often used by people that are either looking to improve their credit rating or take out their first credit card.

Published on 24 Mar 2017 by Kelly Luff

Full Article

Which Credit Report Information Can Landlords See

Whenever you rent a property, you will be required to pass some checks set by the landlord or letting agent to prove that you will be a good tenant and that you’ll be able to afford to rent the property.

Published on 7 Mar 2017 by Kevin Pearce

Full Article

Impacts of late payment on your credit card agreement

We’ve all done it before – had that mad panic when we’ve forgotten to pay a bill. But what happens if you do forget to pay your credit card by the monthly repayment date?

Published on 20 Feb 2017 by Kelly Luff

Full Article


We have loads of great customer reviews