What Running a Car Actually Costs in Year One

What Running a Car Actually Costs: When you’re buying your first car, it’s easy to focus on the price in the advert. But the purchase price is only the beginning.

Once you add car insurance, fuel, road tax, MOTs, servicing, repairs and breakdown cover, the cost of running a car in your first year can quickly add up. For many new drivers, these running costs can reach several thousand pounds before you’ve even factored in the price of the car itself.

The good news is that many of these costs aren’t fixed. Choosing the right car, comparing insurance before buying and budgeting for maintenance can make your first year of driving considerably cheaper.

Here’s what you should include in your first-year car budget.

Car insurance: usually the biggest expense

For young and newly qualified drivers, car insurance is often the largest annual running cost.

Prices vary enormously depending on your age, location, driving history and the car you choose. That’s why it’s important to get insurance quotes before buying a car rather than setting aside an arbitrary amount and hoping it’s enough.

The car itself can make a particularly big difference. A small city car in a low insurance group could produce a very different quote from a more powerful car in group 15 or 20, even if their purchase prices are similar.

There are several other ways to potentially reduce the cost, including:

• Choosing a car in a low insurance group
• Adding an experienced parent as a genuine named driver
• Considering telematics-based insurance
• Comparing quotes before your renewal or start date
• Comparing the total cost of paying annually against monthly payments

Because insurance can account for such a large part of your first-year budget, price this before committing to a specific car.

Fuel: the cost you’ll notice every week

Unlike insurance, fuel isn’t one big annual bill. It’s a cost you’ll see throughout the year.

How much you spend depends on your mileage, the car’s fuel economy, fuel prices and how you drive. Someone covering a short commute in an economical city car will naturally spend far less than someone regularly driving long distances.

Your driving style also makes a difference. Smooth acceleration, anticipating traffic and avoiding unnecessary hard braking can help reduce fuel consumption.

Where you fill up matters too. Fuel prices can vary between nearby petrol stations, so comparing prices before filling the tank can add up to worthwhile savings over a year.

Rooster’s Fuel Finder helps you find cheaper fuel nearby and along your route, making it easier to compare prices without driving around looking for them.

For budgeting purposes, work out your approximate monthly mileage and fuel economy rather than trying to guess one annual figure.

Road tax and MOT costs

You’ll also need to budget for the costs involved in keeping your car legal.

Vehicle Excise Duty (VED), commonly called road tax, varies depending on the vehicle. The amount you pay can depend on factors including when the car was first registered, its emissions and its list price when new.

Always check the tax rate for the exact car you’re considering rather than assuming every small car costs the same.

Once a car requires an annual MOT, you’ll need to budget for that too. The maximum fee for an MOT test on a standard car is £54.85, although many garages charge less.

The test itself isn’t usually the expensive part. It’s the repairs needed if the car fails that can cause problems for an unprepared budget.

Keeping track of MOT and tax dates helps prevent last-minute surprises. The Rooster app can track important dates for your car and remind you when they’re approaching.

Servicing and your repair budget

Maintenance is one of the easiest costs to underestimate when buying your first car.

A routine service at an independent garage can cost a few hundred pounds depending on the vehicle and the level of service required. However, skipping servicing to save money can lead to more expensive problems later.

You should also keep some money aside for unexpected repairs and normal wear-and-tear items.

Common costs include:

• Tyres
• Brake pads and discs
• Batteries
• Windscreen wipers
• Bulbs
• Suspension components
• Minor MOT repairs

For an older first car, keeping a £300 to £500 emergency repair fund is a sensible starting point. The exact amount you’ll need depends heavily on the age and condition of the vehicle.

You can reduce the chances of an immediate repair bill by checking the car’s MOT history before buying. Look for recurring advisories and problems that the previous owner may have left for you to deal with.

Breakdown cover, parking and unexpected costs

Some costs depend entirely on your circumstances.

Parking could cost nothing if you have a driveway and free parking at work. Alternatively, permits, workplace parking and regular city-centre parking can add hundreds of pounds to your annual costs.

Breakdown cover is another expense worth considering, particularly if your first car is older.

Rooster offers breakdown cover from £2.99 a month, giving you access to help if your car breaks down rather than facing the cost and hassle of arranging recovery yourself.

Then there are the expenses nobody plans for.

A windscreen chip, damaged tyre, lost key or pothole-damaged wheel can suddenly add another bill to the month. Keeping a small emergency fund means these costs are inconvenient rather than disastrous.

How much does it cost to run a car in the first year?

There’s no single figure that works for every new driver, but building a realistic budget makes it much easier to see what you can afford.

A first-year budget might look something like this:

• Insurance: potentially £1,200 to £2,500+ for a young or newly qualified driver
• Fuel: around £800 to £1,200 depending on mileage, economy and fuel prices
• Road tax: varies significantly by vehicle
• MOT: up to £54.85 for the test itself, plus any repairs
• Servicing: roughly £150 to £250 for many smaller cars at an independent garage
• Repairs and maintenance: consider keeping £300 to £500 aside
• Breakdown cover: from £2.99 a month with Rooster
• Parking: anywhere from nothing to hundreds or even thousands of pounds depending on where you live and drive

These figures are only a guide. Your actual costs could sit above or below them, particularly when it comes to insurance and fuel.

The important thing is to calculate the costs for the specific car you’re considering before you buy it.

A cheap car with expensive insurance and poor fuel economy can quickly become more expensive than a slightly pricier car that’s cheaper to run.

Year-one car cost FAQs

How much should I save before getting my first car?

Start with more than just the purchase price.

Ideally, you should know how you’ll pay for your insurance and have enough left over to cover your first few months of fuel, tax and maintenance. Keeping an additional emergency fund of around £500 can also help with unexpected repairs or other costs.

If you can afford to pay for your insurance annually, compare the total price against monthly payments. Monthly instalments can include interest or other charges, so paying upfront may reduce the overall cost.

Is it cheaper to run an old car or a newer small car?

Not necessarily.

An older car might cost less to buy, but it could use more fuel, need more repairs or cost more to insure than a newer low-group city car.

Instead of comparing purchase prices alone, look at the total cost of ownership, including insurance, fuel, tax, servicing and likely repairs.

Sometimes spending slightly more on the right car can save money over the following few years.

What’s the biggest way to save money in your first year?

For many new drivers, insurance offers the biggest opportunity to save because it can be the largest individual cost.

Choosing a lower insurance group car, comparing quotes and adding an experienced driver as a genuine named driver could all help.

Driving smoothly can also save money in several places at once. It can reduce fuel consumption and unnecessary wear on tyres and brakes, while it may also benefit drivers using telematics-based insurance.

Do I need breakdown cover in my first year?

Breakdown cover isn’t a legal requirement, but it can be particularly useful if you’re driving an older first car.

Without cover, you’ll need to arrange and pay for assistance yourself if the car breaks down. Having cover means you already know who to contact when something goes wrong.

Rooster breakdown cover starts from £2.99 a month.

Do running costs get cheaper in year two?

Some might, but others won’t necessarily change.

Your insurance could become cheaper after building more driving experience and, where applicable, a claim-free record. However, insurance prices depend on many factors, so a reduction isn’t guaranteed.

Fuel, tax, servicing and maintenance will continue every year. In fact, repair costs can increase as the car gets older.

That’s why it’s better to treat your first-year budget as an introduction to the ongoing cost of car ownership rather than a one-off expense.

Download Rooster and start saving.