Money Advice Service

After housing costs, a car is probably one of the most expensive things you’ll pay for as a young adult. We look at the key costs involved in running a car and give some useful tips on how to try to keep them down.

What you must have by law

There are a few things you must have by law before you can drive your car on the road:

  • Car insurance is a legal necessity. See our guide on car insurance for young drivers for more details.
  • Car tax (officially known as VED but sometimes referred to as road tax) must be paid on all vehicles registered in the UK driven on or kept on a public road. It can be anything up to £1,000 a year or more, depending on how environmentally friendly the car is. When you buy a vehicle, the car tax will not be transferred with the vehicle. So you must tax it before you can use it. See our guide Car tax bands explained for more details.
  • MOT is a yearly test for all cars over three years old. The vehicle must by law pass the MOT to ensure it’s safe and roadworthy. The standard cost is £54.85 for a car. Garages can’t charge more than this to carry out the test, but many garages charge less than this, so it’s worth looking around. See our guide MOT test explained.

Other big car costs

Petrol or diesel

Top tips on reducing your fuel costs include:

  • Careful driving – gentle acceleration and not driving quite as fast, significantly reduces the amount of fuel that you use.
  • Efficiency – consider the fuel consumption of any car you’re looking to buy. The bigger the engine, the more fuel it will use in general.
  • Heavy items – don’t leave heavy things in the car and take off roof racks if you’re not using them. The heavier the car, the more fuel it will use.
  • Shopping – supermarkets often have very competitive fuel prices, and you can sometimes build up reward points to spend on other shopping.
Compare the cost of fuel in your area on

Servicing and maintenance

Motor company the RAC says it costs around £472 to maintain a used car over the course of a year.

This includes getting the MOT, and any servicing and repairs required.

For a monthly fee, a used car warranty will cover certain repairs on your car, and might even include a service and MOT once a year.

If you decide to take out a warranty, make sure you’re clear on what it covers and what it doesn’t.

Breakdown cover

The chances are most drivers have experienced at least one breakdown.

Breakdown cover ranges from simply having an engineer take a look at your car at the roadside, to having the car picked up anywhere in Europe with a courtesy car to continue your journey in.

Naturally, the higher the level of cover, the more it costs.

Make sure you check what’s included in each level of cover and choose the one best meeting your needs.


One of the biggest costs when owning a car is the loss of value over time – this is called depreciation.

Brand new cars lose their value faster than used cars as they are more expensive to begin with.

When you buy a car, think about what it might be worth in a few years’ time – you might be able to see the price of older cars the same make as yours on a car sales website.

This article is provided by the Money Advice Service.