Buying a car is typically the second largest purchase that people will make (after a house). It’s true that you can find pretty decent nearly-new or used vehicles. This can make purchasing a car feel like a financially viable decision. But don’t forget that the vehicle itself is only the first step in the process – there are a number of other costs involved in owning a car.

Below, we detail the different variables that will affect the total cost of any car ownership. It’s best to be aware of all of these before you begin the process of purchasing – or even searching – for a new vehicle. This will ensure that you’re aware of your budgetary limits and personal requirements. Don’t forget that you can use our car finance calculator to establish what kind of numbers you’re looking at. Accordingly, you can then go into your search with eyes open.

Factors to consider in the cost of car ownership

The car itself – and lessons

If you’re already looking for a car, it’s likely that you know how to drive. However, you may be looking prospectively, in which case don’t forget that you’ll need to pay for driving lessons, too. You’ll also need to pay for both the theory and practical test, and your licenses.

Then there’s the car itself – the cost of this will hugely vary depending on make and model, as well as whether it’s a new vehicle or not. Keep in mind that as soon as you drive a new vehicle off the forecourt, its TMV (true market value) will immediately decrease. Typically, cars lose around 15% of their value every year.


Again, the cost of your insurance is subject to a number of variables. If you’re a young driver, that is going to be significantly higher. What’s more, where you live and the car you buy will also impact your premium.


The cost of fuel goes up and down depending on the market. However, you can generally use MPG figures (that’s mile per gallon) in order to work out how fuel efficient (or not) your vehicle is. Newer models are likely to have more accurate data available on this.  This is because since September 2018, the fuel consumption of all cars has had to be measured via the WLTP test (the Worldwide Harmonised Light Vehicle Test Procedure). Diesel cars are cheaper fuel-wise compared to petrol alternatives. However, their use is increasingly restricted and will be even more so come the 2030 Petrol and Diesel Ban.


Vehicle excise duty is an annual tax you have to pay, and it will vary depending on the emissions of the vehicle and its fuel economy. Cars that produce more emissions will be hit hardest by tax. Be aware, too, that as more people switch to electric or hybrid vehicles, there are tax-cuts and financial incentives to this move.

MOT, servicing, and maintenance

There are a number of different parts of a car, all of which need regular maintenance – from the tyres to your headlights. Once your vehicle ages over three years, it will need an annual mechanical check in order to ensure it’s roadworthy. As such, you need to factor both this and regular servicing into your budget.

Tips for reducing the total cost of car ownership

It’s not all doom and gloom – there are multiple ways you can be savvier about your vehicle purchase.


Installing a black box to your car can reduce your premiums. Moreover, so can opting for a higher excess or even parking in a driveway or locked garage. If you purchase a cheaper model of car, this will also reduce your premiums. You may also end up paying less if you pay insurance annually rather than monthly. Under those circumstances, be sure to consider this lump sum payment into your budgeting.

For young drivers, taking the Pass Plus course will reduce costs, as will adding an older driver’s name to the policy in many cases. With insurance, it’s a good idea to shop around with different providers and get a feel for what deal best suits you.

Fuel and tax

You’ll find the best fuel economy with hybrid or electric cars. Not only is electricity cheaper than cars, you’re also doing your bit for the environment. In addition, you may benefit from tax incentives as a result. Before you buy, get a feel for whether or not you could take advantage of government grants. Consider your mileage, too, as this will determine how much you pay for fuel, and what vehicle would better suit your particular needs.

Maintenance and servicing

Manufacturers will often offer warranty plans that can help you manage your maintenance fees. Look at vehicles with longer warranty periods – some can be up to seven years. Shop around for a cheaper breakdown coverage, too, as this membership can end up being an exorbitant fee if you get the wrong one.

Vehicle depreciation

How significantly the value of a new vehicle depreciates is dependent on that vehicle. Buying cars that better hold onto their value will save you money in the long run. Of course, so will regular maintenance of the car and limiting its mileage. Consider, too, whether you really need a brand-new vehicle. Ask yourself whether a nearly-new car might serve its purpose and reduce the depreciation cost? Cars that are a year old are still great vehicles and their value depreciates at a much slower, steadier rate.

Any questions? Speak to My Car Credit today

We understand that it can be overwhelming trying to establish the total cost of car ownership. That’s why our car credit specialists are on hand to answer any queries you may have with the process. We’ve even got a one-stop shop of quality approved used and nearly-new cars that you can use to streamline the process for you.

Call our friendly team on 01246 458 810 today, and start getting a hold on the true ownership cost of your car.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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*for illustration purposes only

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Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!