Commercial insurance article archive
The rising cost of motoring (and what to do about it)
What would you do with £100 per week? Blow it all on new clothes, expensive gadgets, gourmet meals? Save it up and take a well-deserved holiday? Or simply use it to keep your car on the road? Surprisingly, new figures from the RAC's Cost of Motoring Index suggest that the final option is the one most of us are going for – not through choice, but because the rising cost of motoring means that the average car now costs around £100 per week to run.
Although petrol costs have finally started to drop, fuel costs remain one of our biggest vehicle-related expenses, second only to the depreciation of the cars we drive. Finance is third on the list, while car insurance comes fourth. Altogether, we're spending almost £5,540 per year on our cars – a figure which represents an 11% increase on last year's figures.
While all motorists bear the brunt of depreciation and fuel costs, it is younger drivers who suffer most, with many unaware of just how much that old banger they purchased to get them from A to B is really costing them. Despite the costs of motoring, car ownership has never been more popular amongst the younger age groups: 48% of students, for instance, now own their own car, with 3 in five requiring some kind of financial assistance to buy it.
So, what's a cash-conscious motorist to do? While the government has been increasing pressure on drivers to leave the car behind and take the bus or train, public transport isn't always an option – and, even when it is, it can be unreliable, dirty and, for those who travel frequently, almost as expensive as taking the car in the first place. Luckily, however, there are ways to cut down on the cost of motoring, and the best place to start is by taking another look at those expenses.
When you're shopping for a new vehicle, remember that not all cars were created equal as far as depreciation goes, and some will depreciate more quickly than others. Models which are easy to find on the second hand car market (typically those which fall into the "family car" bracket) will depreciate the fastest, purely because their supply is so plentiful.
Prestige cars, on the other hand, will depreciate more slowly. You may not wish to splash out on a prestige car, of course, but when you're shopping for a new vehicle is it a good idea to do some research and find out which models in your price range hold their value longest.
Fuel costs may have started to fall, but they're still the bane of many a motorist's life. Sites like http://www.findcheappetrol.com will help you identify the best value petrol in your area, but switching to a lower cost fuel such as diesel may be a better long-term option. Keeping your car well maintained and driving as smoothly as possible, avoiding sudden sharp increases or decreases in speed, meanwhile, will make the fuel you have last longer.
Few of us can afford to buy a new (or even nearly-new) car outright, which means that some sort of financing is often called for. While today's financing options can make it far easier than ever before to drive away in a new car, having paid very little in the way of a down payment, the interest rates attached to car loans can mean that you end up paying far more than your vehicle is worth. The obvious answer here is to shop around: rather than simply accepting the dealer financing you're offered, get a range of quotes on personal loans, or, if it's at all possible, try using savings to buy your car outright.
The fourth-biggest cost of car ownership, and something that many of us are paying through the nose for. How many times have you accepted your current insurer's renewal quote, simply because you don't have the time to call round competitors for a better quote? By using a site like www.computerquoteinsurance.com, you can easily cut out the legwork involved in getting a quote on insurance, letting the website search for you through quotes provided by some of the UK's leading insurers, until you find the best possible option for you.
By using the company's Pay as You Go car insurance scheme, you can also choose to stop, start or cancel your cover at any time, so, rather than being locked into a 12-month payment plan, you have the flexibility to tailor your insurance to fit your needs.
Another type of Pay as You Go scheme which could help reduce your insurance bill is the Pay as You Drive scheme currently being tested by Norwich Union. Under the new scheme, motorists would have a "black box" fitted to their car, which would track each journey taken (the technology behind this system is known as telematics). Drivers would then be charged for insurance by the mile – a good deal for those with low yearly mileage, but perhaps less so for those who travel long distances.
Computer Quote Insurance also suggests some other ways to cut down on the cost of your insurance, such as not protecting your no claims bonus if you have less than four years to protect, choosing Third Party or Third Party Fire and Theft cover rather than fully comprehensive, and protecting your vehicle with a Thatcham security device, while keeping it in a garage or driveway overnight. You'll also find that older, less valuable vehicles cost less to insure, too. Could it be time to do some downsizing?
Of course, if after trying all of these cost-cutting methods, you still find that the cost of car ownership is getting you down, there's one other option you may want to consider: not owning your car at all. Don't worry, this doesn't mean you'll be walking to work from now on: leasing a vehicle rather than buying one outright can be a surprisingly cost-effective means of remaining mobile, and the Flexxilease option recommended by Computer Quote Insurance offers you a wide range of vehicles complete with service and maintenance, manufacturer's warranty and breakdown assistance.
For a range of further ideas on how to minimise your car insurance costs visit the Computer Quote guide to reducing your car insurance quote.
16 Nov 2006