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Frequently Asked Questions
What is the biggest cost of owning a car?
For most cars, depreciation is the single largest cost of ownership — often 40–60% of the purchase price over 3 years. A new £25,000 car might lose £8,000–£12,000 in value in the first three years. Fuel is usually the second largest cost, followed by insurance. This is why buying a 2–3 year old used car can save thousands.
How much does a car cost per mile to run in the UK?
The AA estimates average car running costs in the UK at 30–55p per mile when all costs are included. A basic small car costs around 30–35p/mile; a medium family car 40–50p/mile; a larger or premium car can exceed 60p/mile. Business mileage can be claimed at 45p/mile for the first 10,000 miles.
How do you calculate car depreciation?
Cars typically depreciate at 15–25% per year. A simple calculation: if a car is worth £20,000 and depreciates at 20% per year, it loses £4,000 in year 1, then £3,200 in year 2, etc. New cars lose the most value in years 1–3 (often 50–60% of purchase price). Electric cars currently have higher depreciation due to rapid technology change.
Is it cheaper to lease or buy a car?
Leasing often has lower monthly costs than buying, and you avoid the risk of depreciation. However, leasing means you never own the car and monthly payments never end. Buying outright is cheapest long-term — especially buying a 2–3 year old used car at the bottom of its depreciation curve. Finance (PCP/HP) sits between the two in total cost.
How much should I budget for car maintenance per year?
Budget around £500–£1,200 per year for servicing, MOT, tyres and minor repairs on an average petrol car. Older cars (10+ years) may need more. Budget £150–£250 for annual service, £55 for MOT, and tyres at £80–£150 each (2–4 needed every 2–4 years). EVs typically cost £100–£300 less per year in maintenance.