Driving down the cost of a car

The cost of running a car is on the increase but by shopping around for insurance, finance, fuel and other necessities, drivers can drive down the cost of being on the road.

Sainsburys Bank estimates that the annual cost of running a car has risen by about 7.2% when compared with last year. The bank calculates that the average annual cost of motoring, excluding any interest repayments on loans taken out to purchase cars, is now around £2,202 - up from an estimated £2,053 last year. Fuel and insurance cost the most, with drivers paying an average of £1,226.20 for fuel and £462.15 for insurance each year. Servicing, MOTs, tax and breakdown cover all add to the total cost too.

Insurance

Competition in the car insurance industry is intense, which is good news for motorists but only if they are prepared to shop around for competitive rates and quality cover. Premiums vary depending on your age, where you live, what car you drive, where you park overnight and your driving history. To get the best deal, use the internet to compare premiums or ring round several insurers to find the best price.

Petrol

Sainsburys Bank attributes most of the increased cost of running a car to a rise in fuel prices. The bank's estimation is that on average motorists now spend around 11% more in this area than they did last year. Petrol prices vary from one forecourt to another so its worth shopping around and making use of discounts and loyalty cards offered by different suppliers. Sainsburys for example offers one Nectar point per litre of fuel purchased.

Downsizing your car

Driving a smaller, more economical car can cut the cost of motoring dramatically. Insurance and running costs are generally less but you will also pay less tax. Drivers of hybrid electric cars dont pay any road tax at all while at the other end of the scale drivers of cars with big engines such as the Jaguar X-Type 2.0 or Range Rover 4.4 V8 pay £210 a year.

Last month Richmond Council in London announced plans to charge owners of gas-guzzling vehicles more to park outside their homes. Richmond-upon-Thames residents with two high-emission cars could pay £750 a year, compared with £200 now, but the greenest cars would be exempt.

03 November 2006 © Moneyextra.com

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