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When you're comparing the price of a new car – particularly when financing or leasing – it's easy to overlook the total cost of running a car.

AA research found that many motorists thought their average monthly spend on a car was just £157.1 In truth the number is almost double that – £310.

So when you look at the monthly cost of leasing a car, you should compare it with all the usual bills that come with running a car. 

Price of the car

As more motorists now finance or lease their vehicles – as opposed to buying one outright – it's easier to add up the total cost on a monthly basis.

The repayments on a car finance agreement or personal contract purchase (PCP) are a big expense, whether it's £200, £300 or £500 a month. But then you don't have to worry about depreciation, as this is absorbed into the monthly figure. 

If you're not financing a new car on a PCP deal and instead are using a loan or savings, then you should expect around 15% depreciation on the car in the first year of manufacturer, and around 10% each year thereafter.


Another significant expense in running a car is your insurance premium. For young drivers this can sometimes exceed the price of the car itself. 

A quote is based on a number of factors, including the driver, vehicle and location, and you need to consider the annual premium before buying a particular car. 

The AA research reported that most customers spend £73 a month on car insurance. 

Cost of fuel

Whether your vehicle runs on petrol, diesel or maybe even electric, it's important to calculate your average spend on fuel each month. You can probably work it out from your bank statement.

Bear in mind the cost of charging an EV is usually much smaller than if you're running a combustion-powered car.

Our survey found that motorists spent an average £107 on fuel each month in a conventional petrol or diesel vehicle. 

Repairs, servicing and warranty and breakdown cover

It's not easy to forecast the cost of repairs and servicing a vehicle some way in the future. 

The maintenance bill could be steeper on used cars, as parts increasingly need replacing, but servicing charges do apply to new vehicles as well.

As soon as the warranty runs out on a new car, you may think about getting a used-car warranty to ensure you're still covered. That's another expense. 

And don't neglect breakdown cover. It's yet another cost but it can be a lifesaver. All combined, these maintenance costs amount to more than £100 a month on average. 

Vehicle tax 

Most cars on the market require you to pay some vehicle tax, with the exemption of vehicles with very low emissions and all EVs. 

It's another annual expense that can take you by surprise, particularly for older cars that are less efficient. 

Travel costs

Apart from the main running costs, there are certain everyday things to consider when it comes to running a car.

In many towns and cities there's the cost of parking, whether it's a permit to park on your road, or car parks while you're out and about. Our survey respondents said they spent £15 per month alone on this, a figure that adds up throughout the year.

Toll roads and bridges are another thing to think about, such as the Congestion Charge zone in central London.

And if you like to keep your motor looking fresh, there is the valet bill or car wash charge.

So why choose AA Lease?

The key advantage with AA Lease is that it bundles many of the usual running costs together, and rewards you by doing so at a reduced rate. 

Unlike a traditional car finance arrangement – where only the cost of the car itself is included in the monthly price – AA Lease includes breakdown cover and vehicle tax in the price.

Another benefit of AA Lease is flexibility. You can adjust the mileage limit and terms.

1 AA Yonder survey 8–14 December 2020.

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