MONEY COMMENT
Keeping Down The Cost Of Motoring

By Cliff D'Arcy
February 12, 2003

It was recently revealed (see Britain's Biggest Expenses) that, somewhat surprisingly, we Brits spend more on transport (£58 per week) than we do on housing, fuel and power (£36).

When you add up all the costs (finance, insurance, Vehicle Excise Duty, MOT, petrol, servicing, repairs and maintenance, breakdown cover, bridge tolls, speeding fines), it can cost well over £2,500 a year to run the typical private car.

The good news is, thanks to government intervention, the price of new cars has been falling since 2000. Unfortunately, depreciation means a new car can lose up to 60% of its value in its first three years.

Now for some more bad news: motoring is going to keep getting more expensive, especially for gridlocked Londoners:

• The worldwide uncertainty over a possible war against Iraq has pushed up the price of crude oil, which may soon translate into a rise in petrol prices. Our cars consume around 33 billion litres of fuel annually. At around 75p a litre, this comes to a staggering £25 billion a year!

• The increasing use of speed cameras and proposed increases in penalty points and fines could hit wayward motorists in their wallets. The government is planning to double the number of cameras, using fines to fund this expansion.

• The central London Congestion Charge is being introduced on Monday, 17 February.

The Congestion Charge is Ken Livingstone's attempt to cut traffic on London roads by charging drivers £5 per day to travel within central London. The charge applies between 7am and 6.30pm on working weekdays (not public holidays).

So, a motorist or businessman forced to enter the charging zone every day will have to find an extra £5 x 252 working days = a huge £1,260 a year!

Failing to pay the charge results in a whopping fine of £80, reduced to £40 if paid within 14 days or increased to £120 if unpaid after 28 days. Persistent offenders face horrendous charges, including clamping, storage and clamp removal fees - ouch!

With about 33 million vehicles on the roads, the government clearly plans to soak motorists to fund its transport policy, push drivers off the roads and improve usage of public transport. Motoring taxes currently contribute a massive £30 billion to the nation's finances every year and this figure is sure to keep on growing.

You can trim the cost of car ownership by:

• Before buying, shop around for a personal loan. You can save thousands of pounds with just an hour's effort - think of it as earning a "fat cat" wage for a short time!

• Do the same with your car insurance, on which we spend around £9 billion a year. The typical annual premium for comprehensive insurance is almost £700, according to the AA's "British Insurance Premium Index". Shopping around by calling a few insurers and brokers can cut this figure by a third to around £450. That's a saving of £250 every year.

• Compare the cost of your breakdown cover - there are several new entrants to this market, who are undercutting the traditional providers.

• Check out our Car-Buying Guide, which is packed with advice on getting the best deal.

• Finally, no speeding = no fines!