The UK is amidst a cost-of-living crisis meaning every penny counts. Navigating spiralling car running costs is a significant concern for many. With public transport often an unreliable and expensive alternative, owning a car is less of a luxury and more of a necessity. So, how can you save on car running costs?
Table of Contents
Key Points
- UK residents face substantial annual car-related expenses, averaging £3,000.
- Smart choices in financing, tax strategies, and car type can offer significant savings.
- Tailored insurance options and informed habits can drastically reduce premiums.
- Proactive car maintenance and repair strategies prevent excessive future costs.
- Fuel consumption can be optimised with efficient driving habits and vehicle care.
Car Running Costs
Road Tax:
Whilst inevitable, there are strategies to reduce or eliminate this:
| Strategy | Benefit |
|---|---|
| Company Car | May cover tax costs |
| Older Car | Potentially tax exempt |
| Electric Car | No road tax currently, although this will change in 2025 with the introduction of Vehicle Excise Duty for zero emission cars, van and motorcycles. |
This is the current situation but always remember to consult the UK government’s Department for Transport for the latest guidelines.
Undertake Regular Car Maintenance
Regular car maintenance can help reduce overall car running costs and helping to avoid some expensive future repairs by catching and repairing issues early.
| Advice | Rationale |
|---|---|
| DIY for Minor Repairs | Save on labour costs |
| Shop Around for Parts | Best deals on necessary parts |
| Heed Warning Signs | Early detection = Cheaper resolution |
| Get Multiple Estimates | Don’t settle; it’s okay to seek a second opinion |
A word of warning re DIY for minor repairs – don’t try the DIY if you haven’t got the skills or it’s a job that really does need the car mechanic expert to work on. Not only could this be dangerous and risk your safety, it could also cause you more financial impact later as you might need a mechanic to correct your mistakes.
Save Money Driving Efficiently
Careful driving and keeping your car in optimal roadworthy condition can further help you save money on your car running costs. Steps to take include:
- Regular Vehicle Maintenance: Ensures peak efficiency.
- Proper Tyre Pressure: Boosts mileage.
- Smart Driving Habits: Such as using cruise control and avoiding idling.
- Route Planning: Avoid traffic congestions.
- Sensible AC Use: Air conditioning increases fuel consumption.
- Limit Load: Heavy cars use more fuel; declutter the boot.
When filling up with fuel, look out for discounted prices, some retailers are cheaper than others.
It may also be worth looking for loyalty savings, for example supermarkets such as Tesco and Morrisons currently give you their loyalty card points on fuel (as well as on their general retail purchases) and these can be used for such as trips out, restaurant meals or for discounts on shopping. Whilst not direct savings, these are effectively ways to save on your car running costs.
Car Insurance
This is a necessity, but with a little homework, it doesn’t have to break the bank.
- Shop Around: Exploring multiple options can lead to the most competitive rates.
- Bundle Policies: Pairing your home and car insurance can often fetch valuable discounts.
- Usage-Based Insurance: Personalise your insurance based on your driving habits for potentially lower costs – if you only drive relative few miles a year then use this in your insurance policy requirements.
- Clean Driving Record: Staying accident-free might qualify you for premium discounts.
What Car Insurance Do You Need?
There are various types of car insurance, tailored to fit different drivers, vehicle types, and specific needs. The main types of car insurance are:
- Third-Party Only (TPO):
- Covers damages to other vehicles and property, or injuries to others.
- Does not cover damage to the policyholder’s car or injuries.
- This is the minimum level of coverage required in many countries, including the UK.
- Third-Party, Fire and Theft (TPFT):
- Includes everything covered by TPO.
- Additionally, covers damages to or loss of the policyholder’s vehicle through fire or theft.
- Comprehensive Insurance:
- Provides the widest coverage.
- Includes everything from TPFT.
- Also covers damages to the policyholder’s vehicle, even if the policyholder is at fault.
When buying car insurance, you can get a policy based on the type of insurance you want, either by comparing online quotes or by speaking to an insurance broker. There are options to consider that may help you save money on your overall car running costs and ensure you have the best cover to meet your needs. Options to consider include:
- Telematics (Black Box) Insurance:
- Uses a device installed in the car (or a plug-in device to your cigarette lighter or using a mobile phone app) to monitor the driver’s habits.
- Premiums are based on actual driving behaviour, such as speed, acceleration, braking, and time of driving.
- Often preferred by younger drivers or those with limited driving histories to potentially reduce their premiums.
- Multi-Car Insurance:
- For households with more than one car.
- Combines all cars under one policy, which can often result in discounted premiums.
- Temporary or Short-Term Car Insurance:
- Offers coverage for a short duration, e.g., a few days to a few months.
- Useful for borrowing someone else’s car or using a car temporarily.
- Classic Car Insurance:
- Specifically designed for vintage or classic cars, which often increase in value over time.
- The valuation is typically agreed upon between the insurer and the policyholder.
- Learner Driver Insurance:
- Offers coverage for those learning to drive.
- Can be short-term (for the duration of lessons) or long-term until the learner passes their test.
- Gap Insurance:
- Gap insurance covers the difference between the amount you owe on a car loan and the car’s current estimated value.
- Useful if the car is written off or stolen before you’ve finished paying for it.
- Pay-as-you-drive:
- Premiums are based on the actual miles driven.
- Commercial Car Insurance:
- For vehicles used primarily for business purposes.
- Typically offers broader protection due to the increased risks associated with business use.
- Rideshare or Taxi Insurance:
- Specifically designed for drivers of rideshare or Taxi companies like Uber and Lyft (currently in the US).
- Covers the driver both during personal use and when logged into a ridesharing app.
When choosing an insurance option, it’s crucial to consider your individual needs, the legal requirements of your country or state, and your budget. Always read the policy’s terms and conditions and consult with an expert, an insurance broker to make informed decisions.