Managing the cost of running a car

Running a car can be an expensive business. But there are lots of ways drivers can manage those costs to stay within their budget. Whether it's fuel, insurance, maintenance or depreciation a few simple tips and tricks can help make owning and running a car far less financially painful.

Fuel: the inescapable cost

You can't go anywhere in a car without fuel. But before you buy a car, consider the kind of mileage you're going to cover. If the vast majority of motoring is done locally and you have access to a charging point, then an electric car - or a plug-in petrol-electric hybrid - that can be 'refuelled' via mains electricity will keep your costs down. They're very good value for money when second hand and an electric car can cost as little as two pence per mile to run. For a regular internal combustion engine car it's 12 pence per mile, however most electric cars struggle to have a range of more than 100 miles.

If you cover a lot of miles, particularly cruising the motorway network, a diesel car will be best suited to your driving routine. Even large executive cars will return 50-plus miles per gallon (MPG) on long runs. For a mixed mileage, consider petrol car or hybrid cars. Many makers also produce models designed to maximise economy with low friction tyres and bodywork tweaks to help return better fuel MPG.

Think about how you drive too. Sticking to the speed limit, avoiding harsh acceleration and braking and paying more attention to road conditions and the behaviour of other drivers can all help save fuel. And look at your car. A well-maintained motor is likely to require less fuel to power it. Even keeping the tyres at their correct air pressures can reap dividends at refuelling time. Check your car's real-life economy with What Car's True MPG Calculator.

Depreciation: the hidden cost

The moment you take ownership of a car, it starts to lose money. Over the first three years of their life, cars can lose anything from a third to two thirds of their value. This depreciation can exceed every other motoring cost but it does vary according to the make, model and age of the car.

Generally speaking, cars that are made for the mass-market by big-name makers such as Ford, Vauxhall and Volkswagen depreciate more rapidly than those made by high-end makers such as Audi or Land Rover. The older a car is, the less value it can lose. And some cars, usually those viewed as future classics, actually stop depreciating and start to gain value when they get to a certain age.

Insurance: think smart

Like fuel, insurance is something you can't live without. But there are plenty of ways to keep the cost of cover down. Your premium is calculated according to how much of a risk the insurer thinks you represent. The key is to keep that to a minimum. Putting the car in a garage is one way. Also, limit your mileage: the fewer miles you cover, the less chance for you to have an accident. Who is the cover for? Insurers look favourably on drivers who have their partner as a named driver. However, by and large, the more named drivers you have the pricier the premium.

An increasing number of insurers are now using in-car telematics for what is sometimes known as 'smart' insurance. By plugging a 'black box' device into the car and using the car's data and GPS to monitor and report individual driver's performances, insurers can tailor premiums to specific drivers. It means careful drivers don't have to pay for the indiscretions of more careless car owners.

Maintenance: independents aren't always the cheapest

Running a car can be a real drain on the family finances. The older the car, the more expensive it can be to maintain if things are continually going wrong. Checking out how dependable an individual model is on the Reliability Index is advisable when drawing up a shortlist of cars to consider.

Where you go for maintenance has an impact on costs. If you buy a car with a manufacturer warranty you don't have to go to the maker's franchise to preserve the warranty. But it does make claiming on that warranty less complicated. Realising that they have a reputation as being overly expensive for used models, franchised dealers frequently operate price-match schemes to attract business away from independent garages.

Car maker franchises also have maintenance packages. Sometimes, these are bought with the car when it's sold new. It's worth checking whether a used car comes with one that's transferable. Alternatively, you can pay dealers a one-off or monthly fee and your servicing is covered for a period of time, usually three or four years. Whether these are good value varies depending on the manufacturer and model. Some are; some cost exactly the same as paying as you go. For drivers of used cars more than seven years old, finding a good local independent garage through word of mouth (or via the Motor Codes rating system) can be the most convenient and - frequently - cheapest way to go.

Tax: check out the CO2 emissions

How much tax you pay on a car depends entirely on its carbon dioxide (CO2) emissions. For Vehicle Excise Duty (usually known as road tax) there is a series of bands from A to M. Band A, for cars with CO2 ratings beneath 100g/km, are free. Band M, for cars with more than 255g/km, cost £515 annually.

How much you pay for your motoring will depend largely on the kind of car you own. The general rule of thumb is, the bigger the car, the more it will cost to run. But following the advice above will help you to keep the outlay you do have to a minimum.


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