Car Running Cost Calculations

Running Costs for your Car

The Cost of Running a Car
by Alastair Taylor

Everyone knows that to run a car costs a lot of money. But how much is a lot of money? Would you be better off taking the bus or the train? Or is running a car well worth the money when compared to the cost of other forms of transport? Whatprice have gathered some car running cost data already.

The simplest way to calculate the cost of running your car is to add up all of your bills over the year, take into account depreciation of the car, and that's your cost. However this doesn't really give a good comparison to other forms of transport, and certainly doesn't help when claiming mileage for business. Therefore a much better way to calculate car running costs is to work out the cost per mile.

To work out the cost per mile of owning a car simply take the annual car cost and divide by your yearly mileage rate. This will typically this would be around 12,000 miles a year, but this obviously varies a great deal on how you use the car.

Petrol Running Costs

Petrol makes a significant contribution to your car running costs. To calculate the petrol costs next time you fill up the car with petrol, fill it the absolute maximum fill level and then zero your mileage counter. When you come to refill your car again, take the mileage reading and record how many litres of petrol you use. The amount of petrol or diesel that you use will obviously vary depending on how and where you have driven your car, so it is probably worth repeating this cost calculating exercise a few times to get a good average petrol cost figure.

Cost per mile (p/mile)= Litres put in x 81p / number of mile
Annual Running Cost (£) = Cost per mile x Average mileage /100

Car Insurance Costs

Obviously car insurance costs vary a great deal from driver to driver, if you want a good deal try Direct Line who offer very competitive rates. Or if you have more than 4 years no claims bonus and are a low risk driver then Esure appear to offer one of the best rates available

Annual Running Cost = Your annual insurance bill
Cost per mile = insurance bill / annual car mileage / 100

Car Service and MOT Costs

Again car service prices vary a great deal from car to car and depend on where you get your car services. Typically a service would cost around 100 pounds a year. , but this can be much more if you get it properly serviced at an authorized dealer.An MOT would be around 50 pounds a year, as long as the car doesn't require any extra work.

If you are worried about high service and MOT costs then try CoverMe who provide insurance against unexpected and expensive costs.

Annual Running Cost = Your annual service bill
Cost per mile = service bill / annual car mileage / 100

Car Tax

Unfortunately we all have to pay this, and its about 100 pounds a year for a reasonably non polluting car, this increases slightly for the large, gas guzzling cars.

Annual Running Cost = Car tax bill
Cost per mile = tax bill / annual car mileage / 100

Car Wear and Tear Costs

This is a catch all category that collects all the car costs that aren't included elsewhere. This should contain small items such as oil refills, bought washer bottles, replaced light bulbs and replacement of worn tyres. These may seem like small amounts but the costs can quickly add up!

Annual Running Cost = Total of all items bought for car
Cost per mile = Total cost / annual car mileage / 100

Depreciating Car Value

This running cost of cars is usually forgotten, which is unfortunate as it can often be the biggest expense! Your brand new car is depreciating in value every mile that you drive it, especially when you first drive it off the forecourt. So although once you have bought the car you wont see this added cost it should be taken into account when working out the total running cost of a car.

Annual Depreciation Cost = (Value when bought - Current value) / Years
Cost per mile = Depreciation / annual car mileage / 100

The tables below give two examples of car running costs, one for a modern car and the other for a car. Note how despite the difference in age the two cars cost pretty much the same per mile to run!

25 year old 1.1 litre 5 door petrol 4,000 miles a year: Disclaimer
Specific Item Annual Cost (£) Cost per mile (p)
Petrol 300 10
Car Insurance 150 3.7
Car Tax 0 (classic car) 0
MOT and Service 200 5
Wear and Tear 150 3.8
Car Depreciation 0 0
Total 800 20
3 year old 1.2 litre 3 door petrol 12,000 miles a year: Disclaimer
Specific Item Annual Cost (£) Cost per mile (p)
Petrol 972 8.1
Car Insurance 350 2.9
Car Tax 250 2.1
MOT and Service 100 0.9
Wear and Tear 179 1.5
Car Depreciation 833 7
Total 2503 20.9

Doing these car running costs calculations myself I found that my car costs just over £2500 pounds a year, or £208 a month. So the running costs aren't quite as bad as mortgage payments, but they are still pretty significant.

Note that my car is a very cheap car to run, so don't be surprised if you work out that your running costs are more than twice this figure. But don't forget, no matter what the running cost of your car is, please let us know!

The Costs of Running a Car

by Alastair Taylor

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"Hello Found your information extremely helpful, many thanks. I am notw qable to work out running costs better :)"


"In calculating running costs to give to my company in order to recieve reimbursement for an office relocation, do you think I am within my right to withdraw the cost of: - Insurance - MOT (excl. service & parts) - Road Tax - and part of depreciation due to the fact that I will need the car anyway. Obviously using the car for commuting will increase costs in servicing so that I agree is a grey area. I believe milage in insuracne is a very small part of it when under around 15k a year. Thoughts are welcome."


"This page suggests that only a car dealer can "properly" service your car and other garages can't. What a brave assumption to make !!"