Running Costs of Used Cars: All You Need to Know – Concept Car Finance

Used cars are generally considered the best choice for anyone on a budget.

Not only is it still a great option for those looking to save money, but with the right care, it’ll drive like a brand-new car. Combined, these two factors have boosted the second-hand car market over the past decades and made second-hand cars more attractive than they’ve ever been.

At the same time, it would be a grave mistake to only consider the purchase price when looking for a car. After all, there are also various recurring expenses which can quickly add up. As a result, seemingly cheap cars can turn out to be veritable money pits. Some experts will even claim that a new car is actually a more economical option in the long run than a used car.

Read on and find out what running costs to consider, why a manufacturer’s maintenance schedule is important, and how to keep your outgoings as low as possible.

Running Costs of a Used Car: An Overview

Before we take a look at the actual numbers, let’s first turn towards the costs included in owning a car.

Standing charges

Standing charges are a key part of car maintenance and are related to owning the car and keeping it available for use. This includes car tax, loan interest and car insurance.

Car running costs

• Fuel: This core maintenance cost varies between car owners. The more you drive, the more fuel you will use and the higher your costs. But it’s not just the mileage that matters. Your driving style, as well as the type of fuel you’re putting into the tank, can have an even bigger impact on your wallet.
• Charging: If you have an electric car, the amount you pay for a full charge depends on your electricity provider at home, and how long it takes to reach 100%.
• Parking & tolls: These are easily the smallest part of the running costs. But parking costs in many UK cities are rising quickly, causing increased maintenance costs.

Car maintenance costs

• Replacement parts: Interestingly enough, dealers make most of their money off replacement parts and repairs. That should serve as an indication of the sheer investment you will need to continue making as the owner of a car. And we’re not just talking about damages from accidents or parts breaking down – daily wear and tear alone will force you to replace tyres or brake pads regularly. These expenses are not something to be taken lightly. High-quality tyres can set you back as much as £100 each!

• Repairs: This will greatly depend on your safety level as a driver. But even careful drivers will occasionally need to have their car serviced, with minor repairs costing more than you think.

New cars vs used cars

One of the UK’s leading money-saving platforms, This is Money certainly seems to think so. According to them, the running costs of new cars can be up to 70% cheaper each month compared to a five-year-old model. 

Although the initial investment can be significantly higher – don’t forget that even excellent cars will lose up to 30% of their value in the first 48 months alone, thereby making second-hand cars a lot cheaper – new cars will slowly but surely close the gap over time.

So how long would it take for a new car to become cheaper than a used one? This is Money provides the example of a Peugeot 208. Whereas the five-year-old model is more than £6,000 cheaper than the new one, its yearly running costs are roughly £700 lower. So the turning point, in this case, would arrive at the 9-year mark, after which the new 208 would start being a more economical choice than its used competitor.

This is Money concludes:

“Of course, a new vehicle will always cost more to buy than a second hand one, but the savings that can be made on the running costs of a new car may mean you have more money spare each month, which can be used to finance a new, or nearly new model.”

The logic behind this perspective seems sound

Still, there are a few important things to consider:

• Nine years is a very long time indeed. During this time, your preferences and requirements may have changed or you may have spotted and bought another highly lucrative opportunity. The entire reasoning behind buying new crumbles once you no longer stick to the original plan.
• The same calculation does not apply if the model in question depreciates more quickly.
• In many cases, these considerations are irrelevant, since the price of a new car is often simply too much for most buyers.

Despite their higher monthly running costs, used cars remain ahead of new ones for a very long time – longer than most people tend to keep their vehicles.

How to keep running costs for used cars down

This is not to say that you can’t keep running costs for your used car down. In his column for the newspaper, The Telegraph, Mike Rutherford claims that he has been able to keep total ownership – and running costs for his 118,000-mile 1999 VW Polo at between £1,000 and £1,200 a year – considerably lower than the £1,700 This is Money assumed for a five-year-old Peugeot 208. He also cites the example of a friend, who purchased an ‘abused 1995 Ford Mondeo diesel estate’ for a mere £150 and never exceeded £1,500 annually in running costs.

So how do they do it? Rutherford has a few important considerations:

• For insurance costs to remain this low, you will need to be slightly older, have a clean driving record and live in a relatively crime-safe area of town.
• You should keep your mileage as low as possible. This is an important and entirely logical consideration. After all, fewer miles mean low fuel consumption (where a new car could save you money), reduced wear and tear and small chances of an accident.

Confused.com also makes a point of keeping your car in good condition to avoid expensive larger repairs at a later time. Small things you can do to keep your vehicle in perfect shape include checking the oil and all other car fluids on a regular basis, making sure the tyre pressure is always correct and changing filters whenever necessary.

Learn more with Concept Car Credit

Want to learn more about life with a used car?

Our experts can talk you through how your driving habits can impact maintenance costs, what to expect when enquiring about car repairs, which cars have higher maintenance expenses and so much more.

Get in touch with the team at Concept Car Credit today for more information.