The Financial Oil Leak of Car Ownership

The Financial Oil Leak of Car Ownership

by Rebecca Hall on 2 Sep, 2011

Halfway through the year and 2011 is yet to reveal a positive outlook for the economy. The second quarter of the year saw inflation rise yet again while interest rates stayed low, tipping the interest rates vs. inflation balance even further towards a rise in living costs. Prices of essential goods such as food and fuel remain painfully high – the costs of petrol and diesel are crucial factors in the cost of consumer goods that are transported by road, and with over 21 million cars on the road in the UK, a concern for a lot of drivers too.

Despite some brief respite during June, with a penny-a-litre decline on petrol to an average of 136.07p per litre across the UK and a short term fall in the price of oil, fuel bills continue to inflate as pump prices fail to keep pace with the real term fluctuations.

So, with the price of a barrel of oil remaining well above the $100 mark, a car is an undeniably expensive commodity in fuel alone, and adding in the cost of insurance, road tax and MOT, car ownership can be crippling. But there are some simple ways to stem the financial oil leak.

Shop around when renewing your car insurance – there is no excuse not to do this nowadays.  Most insurers will offer you a new deal when you renew with them, but it pays to see what other insurance companies are offering. Quotes can vary online and offline, so don’t be afraid to compare car insurance by using a comparison website. Online savings can be huge, and it is possible to get quotes using different variables such as additional drivers, no-claims bonuses and levels of liability affect the premium.

Ensure your car is well serviced – simple things such as ensuring the tyre pressures are correct can save £££s on fuel bills and the engine wear and tear that causes breakdowns.  Keeping your car clean also helps – it may sound the sort of thing that only concerns Formula 1 teams but a clean car reduces drag therefore saving fuel and in the long term, limits damage such as corrosion, which leads to costly paint jobs. And don’t run on empty too often – early 2011 saw a big increase in the number of breakdowns caused by an empty fuel tank.

Go greener – Car tax is unavoidable but the allowances for low CO2 emission cars can really make a difference to your finances, and the environment. The current Car Tax classes make additional allowances of £10 for alternative fuel vehicles and the first year of car tax is free on new cars with CO2 emissions below 130 g/km.

Owning a car is undeniably costly, but with a few considered changes you can at least counter rising fuel costs.

About the Author

Rebecca Hall

Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.