The True Monthly Cost of Running a Car in the UK

Finance is only part of it. Add insurance, fuel, vehicle tax, MOT, servicing, parking and depreciation to see what your car really costs each month.

Author: Spendika editorial team
Published: 2 November 2026
Last reviewed: 2 November 2026
Reading time: 8 minutes

Quick answer

The true monthly cost of a car is far more than the finance payment: add insurance, fuel or charging, vehicle tax, MOT and servicing, tyres, parking and depreciation. For many UK drivers the total is two to three times the monthly finance figure. Work it out per year, then divide by 12.

Ask most drivers what their car costs and they quote the finance payment. The real figure – once insurance, fuel, tax, servicing and the car's falling value are included – is often two to three times higher.

This guide lists every running cost of a car in the UK, shows how to calculate fuel and depreciation, and explains where the savings usually are. Once you know the figure, it belongs in your monthly budget.

What are the costs of owning a car in the UK?

The costs of owning a car are finance or the money tied up in it, insurance, fuel or electricity, vehicle tax (VED), the annual MOT, servicing, tyres and repairs, parking and charges, and depreciation.

Finance or loan repayments – or the money tied up if you bought outright.
Insurance – usually annual, so budget it as an irregular cost; varies hugely by age, postcode and car.
Fuel or electricity – miles per year ÷ miles per gallon × fuel price, or kWh used × your tariff.
Vehicle tax (VED) – the standard rate is £200 a year for most cars registered since April 2017 (2026/27); some cars pay more.
MOT – required each year once a car is three years old; the maximum official fee for a car is £54.85.
Servicing, tyres and repairs – budget for these even in a good year.
Parking, permits, tolls and congestion or clean-air charges.
Depreciation – the value the car loses each year, the largest cost for many newer cars.

How do you calculate your monthly fuel cost?

Annual fuel cost = annual miles ÷ mpg × 4.546 × price per litre. At 8,000 miles, 45 mpg and £1.40 a litre that is about £1,130 a year, or £94 a month. For an electric car, divide miles by miles per kWh and multiply by your electricity price.

Fuel cost per year = annual miles ÷ mpg × 4.546 × price per litre. At 8,000 miles a year, 45 mpg and £1.40 a litre that is about £1,130 a year, or £94 a month. For an electric car, divide annual miles by miles per kWh and multiply by your price per kWh – home charging on an off-peak tariff is usually far cheaper than public rapid chargers. The Car Cost Calculator works this out for you.

What is car depreciation and why does it matter?

Depreciation is the value a car loses over time. A car bought for £18,000 and worth £11,000 three years later has cost £7,000 – about £194 a month – even though you never see a bill for it.

A car bought for £18,000 and worth £11,000 after three years has cost £7,000 – about £194 a month – before you pay for anything else. You do not see this cost until you sell or part-exchange, which is why it is so often left out of budgets. Putting the same amount into a pot helps you save for your next car.

How can you reduce the cost of running a car?

Compare insurance at every renewal, pay annual costs in one go when you can, keep tyres at the right pressure, use an independent garage after the warranty ends and compare short trips with public transport or a car club.

Compare insurance at every renewal rather than auto-renewing, and track motoring costs in the budget planner.
Pay annual insurance and tax in one go if you can – monthly instalments often cost more.
Check tyre pressures monthly – under-inflated tyres increase fuel use and wear.
Use an independent garage for servicing outside the manufacturer warranty.
For short urban trips, compare the cost per mile with public transport or car clubs.

Worked example: a 4-year-old petrol hatchback

8,000 miles a year, bought on finance:

Finance payment	£210/month
Insurance (£600/year)	£50/month
Fuel (8,000 miles, 45 mpg, £1.40/litre)	£94/month
Vehicle tax (£200/year)	£16.67/month
MOT, service and tyres (£480/year)	£40/month
Parking and permits	£25/month
Depreciation (£2,000/year)	£166.67/month
True monthly cost	£602.34

The finance payment is about a third of the real cost. Enter your own figures in the Car Cost Calculator.

Key takeaways

The finance payment is often only a third of the real cost.
Depreciation is usually the largest hidden cost of a newer car.
Work out annual costs, then divide by 12.
Paying VED monthly adds a 5% surcharge.
Insurance shopping at renewal is the quickest saving for most drivers.

Use Spendika with this guide

Free calculatorCar Cost Calculator Spendika featureBudget planner

Frequently asked questions

How much does it cost to run a car in the UK per month?

It depends heavily on finance, insurance and mileage, but once depreciation is included many drivers pay several hundred pounds a month.

Is it cheaper to pay car tax annually?

Paying monthly by direct debit adds a 5% surcharge; paying for 12 months at once is cheapest.

How often do I need an MOT?

Every year once the car is three years old (four in Northern Ireland).

Is an electric car cheaper to run?

Usually per mile if you can charge at home on an off-peak tariff, but compare finance, insurance and depreciation too.

Do electric cars pay road tax in the UK?

Yes. Since 1 April 2025 electric cars pay vehicle tax like other cars. Cars with a high list price may also pay the expensive car supplement for five years – check GOV.UK for current thresholds.

How much does an MOT cost?

The maximum official MOT fee for a car is £54.85, and many garages charge less. Repairs needed to pass are extra.

What is the cost of running a car per mile?

Divide your total yearly cost by the miles you drive. In our example, £602.34 a month is £7,228 a year; over 8,000 miles that is about 90p a mile once depreciation is included.

Conclusion

The true monthly cost of a car includes far more than the finance payment. List every cost for a year, add depreciation and divide by 12 – then decide whether the car is worth what it really costs. The free Car Cost Calculator does the sums, and Spendika tracks your actual motoring spending month by month.

Create a free account Budget planner

Related guides

Sources and disclaimer

This guide is general information, not personalised financial advice. Figures in examples are illustrative; check current rates and rules with the official sources below before making decisions.