How to Reduce Your Monthly Car Costs – A 6 Point Guide

new cars in a showroom
Image licenced under CC 2.0

Cars are becoming increasingly expensive to run and can be a sore point for those trying to survive on a budget.

This is a long term trend and one that looks like it’s set to only go in one direction; therefore taking action now to try and get into a routine of reducing motoring costs is a smart idea.

There are a number of factors attributing to these rising costs which will be addressed in this article alongside solutions mitigate the effects and curb your spending.

Why running a car has become more costly

Petrol and diesel are fossil fuels; they rely on crude oil which is getting lower in supply every day. As a result the price of fuel is always on the rise as it becomes more difficult and expensive to produce.

Car insurance prices are also rising due to an increase in fraud and professional cheats setting up policies with the sole intent of making claims. Even if you have no claims and a clean record the overall cost of taking out an insurance policy across the board has risen.

The price of new cars still remains high and most consumers have to take out finance to afford such a purchase. With credit being tight as a result of the global financial crises which started in 2008 it is harder to get a loan for such purchases. Those who do get credit will often find that it is at a higher interest rate than they previously would have gotten.

All of these factors contribute to an overall increase in what we pay to operate our cars. The costs are rising far faster than inflation and creating a financial strain for many individuals.

How you can lower your monthly outgoings on cars and driving

1. Try and use alternative methods of transport as and when you can. The less you use your car the lower the monthly and ongoing costs are going to be (lower mileage also saves you money on lease repayments but more on that later). There are some really easy ways to do this without causing too much harm to your transportation routine.

One of the most recommended methods is to set up a car pool to work with colleagues who live nearby. If you can get 5 people involved you only have to drive to work 1 day a week which will save you a considerable amount of money. It will also reduce the amount of wear and tear to your car and so this greatly reduces the probability of needing repairs.

If you’re not near any colleagues or don’t fancy the concept of carpooling then there are alternative such as cycling or taking public transport. Both will save you a lot of money and help the environment too. Basically any way you can split or reduce the fuel cost of getting from A to B will help your bank balance a great deal.

Silhouette representing two people lift sharing

2. Next you should take a look at the amount of cars you have in your household and ask if each one is absolutely necessary. Some families (such as those with older children still living at home) have a car for each inhabitant. This is usually a huge waste of money and consolidating down to as few vehicles as possible will help all parties involved make savings.

Too Many Cars Per Household Can be a Cash Leak

3. Changing your driving habits just a little bit can add up to big fuel savings in the long run. You’d be surprised how much fuel you can save by being a little bit more conscious of your driving habits. Different sources cite different saving amounts, but depending on how you currently drive savings can be as much as a 20% reduction.

One of the easiest steps you can take is to save fuel is regularly make sure your tyres are inflated to the recommended PSI (which you’ll find in the car’s manual). Running on under-inflated tyres means the engine has to work harder to pull the car along. So taking the time to check your tyre pressure as little as once a month can have a passive impact on how much fuel you’re paying for.

Other steps include watching your speed and how quickly you change between speeds. It is generally said that between 50-60 miles per hour is the most efficient speed to drive at. When speeding up or slowing down you want to make sure that you’re doing so as gradually as possible (whilst staying safe of course). Anticipating the need to speed up and slow down in advance means that you avoid sudden bursts of fuel being used or wasted. The same principle applies to starting from a complete stop; you want to do so gently and slowly to avoid wasting fuel.

Fuel gauge in a car with the needle showing half a tank left

4. Refinancing your car so that it’s paid off over a longer period can also help reduce monthly costs. If you’ve used the tips above to cut back your outgoings but would like to reduce payments further then this is a possible way of doing so.

For example if you had a finance deal to pay off your car over 5 years,  you can take out another payment plan in its place that would be the equivalent of paying back over 7 years. This in turn reduces the amount owed per month by spreading out the repayments over a longer date range.

Taking this option is not however without its downsides; by taking on a longer payment plan you increase the chance of a breakdown before you’ve paid off the full balance. If this was to happen then you’d be left owing money on a car that doesn’t work. In some cases you’ll pay more interest for a longer payment plan as well so keep an eye out for this.

documents piled on top of each other with organisational tabs present

5. Similar to spreading out your finance repayments another option to lower the monthly cost is leasing. When you lease a car what you’re actually paying for is the depreciation of the vehicle’s value over the period you use it plus interest to the finance company.

Therefore if having yourself registered as the car’s owner is not a big deal for you then you can save money by leasing. Most people take out a lease contract for between 3 and 4 years (3 being more popular due to not having to pay for MOTs). So you’re essentially getting a new car every 3-4 years for a lower fixed monthly payment.

This option might not be for everyone but if you’d be changing car fairly regularly anyway it’ll save you a lot of money.

cars lined up in unison on a street

6. Finally there’s the option to go down the old fashioned route of buying used, haggling and searching out a real bargain. New car sales have been rising for the past 5 years straight in the UK and this has had a knock on effect on the used car market.

With a lot of people buying new there’s an equal amount of used cars being put back into the market. This allows savvy buyers to haggle more, play dealers off of one another and generally take advantage of market conditions.

Buying used isn’t everyone’s preference as some like the safety and peace of mind that comes with a new car. But if you’re not too fussed about that then there’s a lot of money to be saved.

Many cars for sale in a large holding lot

Got any good money saving tips for motorists? Let us know by leaving a comment below, if it’s not spam then we generally publish it!

This entry was posted in Reports & Research on by Marc Murphy

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