Cut the cost of keeping your car on the road
The annual cost of keeping a car on the road is increasing, according to the AA. During 2008 petrol prices jumped on the back of rising crude oil costs - although prices have now started to fall, many households hit by the credit crunch are starting to find the cost of running a car is simply too high.
The AA's public affairs technical specialist, Vanessa Guyll, says: "Insurance, depreciation and fuel are the three main elements in the cost of motoring and, on average, all are costing more and wiping out savings from longer tyre life and servicing intervals."
However, while these overall costs might be rising, there's still a lot that smart drivers can do to cut the cost of running a car.
Cut the price of petrol
There are ways to cut your petrol costs. Type "find + cheap + petrol" into your internet search engine and half a dozen websites will tell you about the cheapest petrol stations in your area. One example is petrolprices.com, where you can sign up to receive regular petrol price updates.
How you drive affects how much fuel you use. Tests carried out by the AA have found the optimum driving speed to be 56mph. But these speeds can be difficult to maintain and dangerous on motorways. "For motorway driving we recommend 70 miles an hour as an efficient speed.
"If this speed increases to 85 miles an hour, the average car loses 25% fuel efficiency," says Vanessa Guyll.
Other recommendations include changing up a gear as soon as possible - but without making the engine work harder. Keeping your tyres properly inflated will help with traction and make the car more efficient. But having a roof rack, a loaded boot, your windows open or air conditioning on will use more fuel, so only make use of these if you have to.
Congested roads are to blame for a huge loss in fuel efficiency, as engines idle waiting to get moving again. Since 2005, however, many big-name car companies have released compact models fitted with devices that shut off the engine as soon as the car is stationary for a few minutes.
Guyll says that environmental pressure from the European Union has contributed hugely to a leap forward in engineering as a way to reduce reliance on fossil fuels.
Motor insurance premiums vary so shopping around for insurance is vital. But before you do, there are a number of things you can do to keep the quotes you get as low as possible.
Fitting an alarm or immobiliser, or just using a steering wheel lock, will shave a few pounds off most quotes. For new drivers, adding a more experienced driver to their insurance, even if they're unlikely to use the car, can significantly reduce the cost. And paying the full price upfront is cheaper than paying monthly, as most insurers charge an unattractive APR.
"The average person compares only five policies before buying," says Richard Mason director at moneysupermarket.com. "It's so important to shop around." Mason explains that insurance companies will often offer you additional services, such as breakdown cover, which can be bought much cheaper elsewhere.
Using price comparison websites should save time, effort and phone bills, as they only require the user to input their details once. But as they source quotes from a limited number of suppliers you should always make sure you use more than one comparison site. Mason recommends opting for an excess of £500, in part because the majority of minor repairs cost less than this.
"If I cause £400 worth damage to my car, and my excess fee is £300, I'll have to pay out the £300, but the next time I get my car insured, the premium will rise substantially because I've made a claim. Also, if I choose a policy with a £500 excess, the insurance company knows I'm not going to make a claim for less than that amount and they won't be paying for small scrapes, so the premium drops."
Unless you have breakdown cover, you risk forking out £65 to £70 every time a flat battery or broken clutch leaves you stranded on the hard shoulder. RAC and AA offer similar services, but the price varies so check before you buy. A good tip, though, is that both offer online discounts.
Although the RAC and AA are the most well-known organisations, they aren't always the cheapest. Shop around using comparison websites. Mason says that there's no difference between the big names in breakdown assistance and the less well-known ones.
His advice is to do the research, rather than go straight for a well-known brand. It's important to check the small print before you commit to anything - some cheap policies require you to pay an excess on each call-out while others will not help you if you breakdown at home. Also, the cheapest require you to pay upfront and reclaim your costs later and most have a limit on how many times you can call them out each year.
Is my journey necessary?
The most straightforward way to cut car costs is to drive less often, cutting miles and avoiding the frequent short journeys that damage engines and increase costs in the long run. If you're planning a long journey in advance, compare train fares at thetrainline.com or nationalrail.co.uk.
If you book early enough you can find tickets at a significant discount. On a more day-to-day level, car sharing is taking off across the country. Liftshare.com is the biggest car-sharing organisation in the country with 172,000 members and a further 550 people joining every day. Liftshare membership is free for individuals.
"Our members last year saved around 40 million miles, or 10% of their CO2 emissions, saving each individual £1,000 a year," says Ali Clabburn, the founder of the company.
Drive a different car
The biggest - but arguably most difficult - savings are to be made from switching to a different car. All cars depreciate in value the moment you drive them out of the showroom, but some do so quicker than others. For example, the AA calculates that a car with an original purchase price (when new) of between £10,000 and £13,000 will lose £1,557 of its value each year, but a car with a list price of more than £30,000 will lose nearly four times this amount at £5,670.
The AA also says that a car purchased new for between £10,000 and £13,000 will cost 17.28p a mile to run, while a car worth more than £30,000 will cost 28.50p a mile to run - 65% more. Standing charges such as road tax, insurance and the cost of getting a car loan will also be higher for more expensive cars.
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.