How Much Does It Cost to Own a Car in 2023? Expert Breaks Down the 7 Key Costs

Having a car gives you a great deal of flexibility and freedom, allowing you to get from A to B with little hassle. However, when buying a car, it is really important to understand the types of costs involved in car ownership – beyond the initial payment – to ensure your ideal car is affordable day-to-day.

Below, Lucy Sherliker, Head of Customer at car finance specialists Zuto, shares some of the typical costs involved with car ownership to consider before you make a decision on your next car, along with a breakdown of the costs Brits spend running and maintaining their cars. 

1. Initial cost of becoming a car owner 

When becoming a car owner, the first cost to consider is the car itself. Depending on your personal financial situation, PCP or HP car finance may be a helpful option to spread the cost.

Lucy says: “In 2023 the average cost of a used car has risen to £8,923.37 due to shortages of new cars in the market. As a result, many people are considering car finance which allows you to spread the cost of your next car by paying a fixed sum each month.

“Another option is a no deposit car finance loan which enables you to get behind the wheel without facing any upfront finance costs. This is an ideal option for those who need to quickly purchase a car without an available lump sum.”

2. Insurance 

Insurance can sometimes  be one of the more expensive parts of car ownership and this will vary based on several factors which you should understand before settling on a car.

According to the Association of British Insurers, drivers in the UK spend an average of £478 per year on car insurance2, but this can be less or more depending on a range of factors.

Lucy explains: “One of the largest compulsory costs you’ll need to consider is insurance and the make and model of your car can have a large impact on how much this will cost you monthly. Once you have a few different car models you are interested in you should explore insurance options for each to better understand how these vary to find an affordable deal.

“Alongside this, factors such as your age, address, annual mileage, where you park your car, modifications to the vehicle and your driving history can all impact the cost of this.”

3. Fuel

Fuel is another key expense of car ownership, coming in on average at £811 per year3 so always research which car models have the best MPG to keep the costs as affordable as possible.

Lucy says: “There are four different types of car to consider: Diesel, petrol, hybrid, or electric and each comes with various perks and pitfalls when it comes to cost vs efficiency. 

“A petrol car is often cheaper to buy and repair than diesel or hybrid counterparts meaning it can be a good option if you’re looking to keep costs down. 

“Whilst diesel cars are often the most fuel efficient of the two, diesel can be more expensive to buy than petrol (diesel cars often also emit higher emissions which you might want to consider).

“Hybrid cars, which contain an electric motor alongside the fuel engine, offer better fuel efficiency than both diesel and petrol cars, making them cheaper to run day-to-day, however complex engines can make them more expensive to repair and maintain.”

“Meanwhile an electric car is cheaper than filling a car with fuel – however the price is dependent on where you choose to charge it, with public charging points often costing a lot more than if you were to charge your electric car at home.” 

Lucy adds: “Something else to consider when picking your next car is its fuel efficiency, or MPG (Miles Per Gallon), which indicates how far you can travel per gallon of fuel. This lets you work out how much, on average, you will pay per year in fuel costs based on your estimated yearly mileage. It is always worthwhile researching this to ensure you secure a car that has efficient fuel consumption.”

4. Road tax

The flat rate of vehicle tax in 2023 / 2024 is £180, but you may pay more or less depending on a series of factors, meanwhile electric vehicles are currently free to tax, although this is due to change in 20254. 

Lucy explains: “Engine size, fuel type, emissions (the lower the emissions, the lower the vehicle tax), and when the vehicle was first registered are all considered when determining the amount of tax you will be paying on your vehicle, so again look how this varies across the different car models you are interested in. Whilst this payment is cheapest when paid annually, there is also the option to split this and pay every six months to spread the cost.”

5. MOT and car repair costs 

The maximum cost of an MOT test in 2023 is currently £54.854 which applies to any make or model of car. This works out as just £4.57 a month if you break it down.

Lucy says: “By law you are required to get an MOT once a year, unless the car is brand new, in which case you don’t need to get one for the first three years. 

“Some of the most common maintenance repairs include repairing signal lights, suspension, brakes, and tyres. Driving sensibly and taking care of your car can help to avoid any unexpected problems.

”When considering costs, it may be tempting to opt for an older car, however you should be prepared to potentially spend more on any wear-and-tear type of fixes.”

6. Everyday maintenance 

As with any regular expense, car maintenance can add up month by month: According to Kwikfit, on average you’ll spend £190 per year on general upkeep of your car3. 

Lucy says: “Daily maintenance jobs like checking and topping up your engine oil or coolant could save you expensive trips to the garage and will keep your car in good condition, therefore saving you money in the long run. To keep maintenance costs affordable it is a good idea to try and set aside money each month for whenever an issue arises.

“Some of the things you’ll need to consider are: 

  • Coolant – about twice a year6 

  • Engine oil – about every 6 months7

  • Replacing tires – about every 20,000 miles for your front tyres, and about every 40,000 miles for your back ones8

  • Replacing windscreen wipers – about every 12 months”9

  1. Breakdown cover 

On average, basic breakdown cover will cost you about £60 per year10, depending on the level of cover you choose.

Lucy adds: “Although an optional additional cost, it can be worth paying in the case that your car does break down and you need roadside assistance.”