How To Beat Fuel At £1 A Litre!

By Cliff D'Arcy
May 2, 2006

Although I've never owned a car (nor have I driven one since 1999), even I've noticed that fuel costs have been rising rapidly in recent months.

Indeed, the average price for diesel in my neighbourhood is over 99p a litre, and I've seen it for sale for between 97p and £1.07 a litre. My wife's car has a sixty-litre fuel tank, so the 10p-a-litre difference between the cheapest and dearest forecourts comes to £6 per tank. Ouch!

So, without further ado, here are ten money-saving tips to give the UK's 33 million motorists a break from rising fuel prices:

1. Fuel

How do I know so much about fuel prices in my area? Simple: I've registered at free price-comparison website PetrolPrices.com, which compares fuel prices at almost 10,000 forecourts across the UK, or about 96% of all service stations. Hence, my first tip is to use this website to price-check fuel costs in the area where you work and where you live, and fill up at the cheapest location.

Also, sign up for the free Pipeline Card, which is negotiating with a national fuel retailer to introduce a loyalty card which could save members between 5p and 7p per litre of fuel. Although the card has yet to be launched, 340,000 members have already signed up, so it should take off in the next few months.

In addition, driving more efficiently and looking after your car can reduce your fuel consumption. So, keep your tires properly inflated; remove roof racks and other weighty objects when you don't need them; avoid sharp accelerating and braking; and switch off your air conditioning (it increases fuel consumption by about a tenth).

2. Servicing and repairs

Until October 2003, car manufacturers and dealers were able to stitch up motorists with anti-competitive behaviour. By forcing motorists to have their cars serviced at branded garages, they kept the cost of servicing, repairs and maintenance artificially high.

Thankfully, with the death of this block exemption agreement, motorists are free to have their cars serviced wherever they like. So, rather than paying over the odds for parts, servicing and repairs at a branded garage, try calling around local independent garages for a quote. My local Renault dealership wanted £255 to service my wife's car, but she found an excellent independent garage which did the same work for £143 -- a saving of £112, or 44%. Hurrah!

3. MoT tests

Rather than paying over the odds at your local garage, book your car into your local council's MoT testing centre. As these centres only provide MoT tests, not repairs, there's no incentive for them to conjure up unnecessary faults and repairs. You can expect to pay under £45 for an MoT test at a government-run centre; contact your local council or visit its website to find your nearest centre. For example, my nearest centre is here.

4. Finance

Ah, what a minefield car finance can be! To be honest, if you have the money, the best way to pay for a car is with cash, because you avoid paying high rates of interest by not borrowing to fund your vehicle.

Alas, very few people have £10,000+ of ready cash lying around in a savings account, so most of us are forced to borrow at least some of the purchase price of a car. My primary piece of advice when it comes to financing a car is: don't take finance from a dealer without shopping around first. As I explained in Nifty Ways To Finance A Car, even 0% finance deals can be a false economy if they prevent you from getting a decent discount off the list price.

Frankly, most car buyers would be far better off arranging a low-cost personal loan, rather than opting for dealer finance, as Best Buy personal loans can be had at rates as low at 5.5% APR. You could even buy a car using a Best Buy 0% credit card, as one of my friends did!

5. Insurance

My wife renewed her car insurance today, but not with her existing car insurer (Direct Line, which has always offered competitive premiums in the past). In fact, by using these five tips, she switched to a new insurer, reducing her premium from £410 to £332 -- a saving of £78, or 19%. What's more, her new policy has lower claim excesses, and includes a courtesy car as standard, which Direct Line doesn't. Result!

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6. Breakdown cover

The market for breakdown cover and roadside assistance is dominated by three major players: The AA, Green Flag and RAC. However, competition is hotting up as more and more providers enter this market, so it pays to shop around for cheaper protection. Why pay £150+ a year for this service, when you can get Best Buy cover for under £35?

By the way, you can reduce the risk of breakdowns and accidents with a monthly check of your car's battery, tyres (including the spare and tools to change it), water and anti-freeze in the coolant tank, windscreen wash, and by cleaning all external lights. Also, watch out for common problems such as faulty spark plugs, an ill-fitting fan belt and a cracked distributor cap.

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7. Warranties, GAP insurance and payment protection insurance

Let's get rid of these three over-priced policies in one go. Having worked with leading motor manufacturers and insurers for more than a decade, I know that these policies are hugely over-priced.

Rather than paying over the odds for a dealer warranty, why not self-insure by setting aside, say, £50 a month in a top-notch savings account to pay for repairs and so on? That way, if you need to make a "claim", the money's there, and if you don't, you keep the pot and accrued interest. Sweet!

GAP insurance: if your car is written off, the payout from your motor insurer may not be big enough to pay off the balance of your finance agreement. Hence, GAP insurance covers the difference, so you're not left out of pocket. Sadly, motorists find this product difficult to grasp, leaving dealers free to charge top dollar for it: commissions on this cover frequently exceed 80% (four-fifths of the total cost!).

Payment protection insurance (which covers your repayments if you die or can't work due to accident, sickness or unemployment) is another massive rip-off, with equally excessive commissions, so just say NO!

8. Go green: cycle, or share a lift

Half of all journeys we make are less than two miles, yet millions of us jump in our car to drive this distance or less, which an able-bodied person could walk in around thirty minutes. For journeys up to five miles (which account for three-quarters of all trips), a bicycle is ideal -- and is healthier, too. Alternatively, commuters can sign up to a car club or lift-sharing scheme such as LiftShare, which has almost 110,000 members.

9. Use a cashback card

If you're spending a fortune on motoring costs, why not get a refund of £1 to £2 for every £100 that you spend? If you always pay off your credit card in full each month (and therefore don't borrow on your card or pay any interest), you can earn cashback of up to 2% of your spending with a Best Buy cashback credit card. For instance, since last July, I've earned a tidy £95 by being paid to spend. Eureka!

10. More top tips

Finally, if you'd like to learn more about depreciation, getting deep discounts off a new car, half-price fuel (liquid petroleum gas) and other tricks, read Ten Routes To Cheaper Motoring and Tremendous Tips For Motorists.

Did you know? Of the £30 billion or so we spend on fuel each year, the taxman takes around £20 billion in fuel duty and Value Added Tax. Crikey!

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