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Purchasing costs vs running costs: Can you really afford a car?

Purchasing costs vs running costs: Can you really afford a car?

21 February 2019 Concept Car

A recent study by MyJar provided an overview of the average costs of car ownership. The results may shock you. According to the study, the average life time car costs in Britain amount to a staggering £206,625.04.

Car prices have indeed gone up over the past decades. But this alone can hardly explain this number.

The actual explanation may surprise you: Purchasing costs are only one side to the story. Running costs are pretty hefty, too – and they add up quickly.

The danger of easy finance

At first, calculating the costs of a car seems easy enough. Just find a monthly rate you can afford. Then work out the term and interest accordingly.

New options such as PCPs have made it easier than ever to buy a new car on finance. But many customers can only just afford their monthly rates. When they discover that the costs of paying back the loan are only part of the equation, they’re in for a rude awakening!

Purchasing costs

The average cost of owning a vehicle in the UK is £388.45. Now, take an educated guess: How much of this, would you say, are actual loan costs and how much of it are running costs?

The answer may surprise you. Running costs and loan costs both make up almost exactly half that sum. After you’ve paid off your loan, this percentage naturally shifts towards running costs.

To return to the total life time car costs of £206,625.04: ‘Only’ £41,976.43 of that (20%) is actually the cost of buying cars. The far larger part is taken up by other factors.

So what is it, exactly, that makes driving a car so expensive?


Vehicle Excise Duty, also sometimes called road tax, is the monthly amount you pay just to be allowed to drive your car on UK roads. It is one of the single most important sources of income for the treasury.

VED is hotly debated in the media and very political. It is not, however, one of the most expensive running costs. For most cars, it clocks in at a mere £140 each year. That is only just over a tenner per month.

Still, every car in the UK does need to pay road tax. So it’s vital to include it in your calculations.


Because insurance is so obviously essential (and, may we add, mandatory), we rarely discuss its financial impact. This, however, is a grave mistake.

Compared to VED, insurance costs are actually quite significant. They amount, on average, to almost £40 each month. That may not sound like a lot. But to some, even such a small amount can make the difference between being able to afford a car or not.

Insurance is particularly salient, because you can really get burned trying to keep these running costs down. Our advice is to first make sure the contract really includes everything you need. Only then, check to see if you can afford it. If you can not, it may be necessary to push back the purchase until you can.

Repairs and maintenance

Let’s face it: We’re all afraid of running into an accident with our cars. And statistically speaking, chances of that happening are quite high. On the other hand, your car will need repairs and maintenance work even if you remain accident free.

It is easy to overestimate these costs. Even experts routinely set repairs too high in their budgets. And yet, they are nothing to scoff at. You should at least expect to pay, on average, £15.96 each month for routine maintenance and servicing and £13.26 for unexpected repairs and breakdowns.


Of all the running costs, fuel is by far the most significant, financially speaking. This should come as no surprise. Fuel is literally (pun intended) keeping your car running.

Fuel costs depend decisively on the type and model of car you’re driving. The more recent your car, the better its performance will be. Smaller and lighter cars will do better than SUVs.

All in all, you should expect fuel costs of between £60 and £70 each month.


Cleaning your car may not be the most essential thing to do. Still, it is part of the larger goal of keeping your vehicle in great shape.

The more care you award to your car through the years, the longer it will drive well. And the more you can charge when selling it.

Cleaning will not cost you a lot, neither in terms of money nor time. But it is something you should definitely factor into your budget.

What can you really afford?

Add up all of these numbers and then take a look if you can still afford that loan. If you’ve set aside some money, you shouldn’t be in trouble. But if you’re not quite there yet, don’t over exert yourself. It can really pay off to wait a little longer.

If you’re strapped for cash, we’re more than happy to help you balance your purchasing and running costs. Thanks to our flexible monthly rate policy, we can reduce your monthly loan commitments to ensure you can pay all above mentioned running costs.

Talk to us about how we can help you realise your goals. Give us a call or visit our Manchester showroom and we’ll work out a solution that should please even the most prudent among you.

21 February 2019 Concept Car