Cost of Having a Car in London

view of taxi in the street on late evening in London, UK.

London is a large city, so you might consider buying a car will be a great solution for your daily commute or weekend trips. Yet, car owners have to pay insurance, road tax, fuel, maintenance, charges, and parking fees. You should be ready for it.

Running an average car in London would cost you about £189 per month or £2,269 without considering the car price and £383 per month or £4,597 a year with a car loan. This amount includes expenses like insurance, fuel, depreciation, maintenance, parking, taxes, etc.

Driving a car in London isn’t cheap. Expensive car insurance and parking can shake your budget. And considering excellent London’s public transport system, a private vehicle might be unnecessary for many. This article breaks down annual and monthly expenses for having a car in London and whether owning a vehicle in the UK’s capital makes sense.

Cost of owning a car in London

Various housing in London, UK.

Fuel, parking fees, road tax, licenses, driving tests, auto clubs, and registration – are familiar words for car owners in London. Keeping these costs in mind will prevent you from making some irrational decisions.

The cost of having a car in London can be compared to the one you will pay across the UK. Additionally, London drivers should consider parking costs, and insurance premiums based on your postcode can differ in price.

If you live or work in central London, be prepared to pay around £250 per month for parking. If you are in the Congestion Zone, then you will need to pay daily fees, but residents of that area get a 90% discount.

New research has found that car ownership costs the average London driver more than £3,000 a year.

A car-sharing network Zipcar did research where they figured that an hour of driving costs £18.88 in London, assuming you own a car. The study estimates that average drivers spend about 182 hours driving per year.

With that said, London’s drivers spend about £3,436 across the entire year on this pleasure (182*£18.88). It’s more than double the cost of a zone 1-3 London annual travel card.

Furthermore, the research found that the cost of car ownership in London was higher than in Paris (£18.55 per hour) and significantly higher than in Barcelona and Madrid (which sit at £11.64 and £12.13 per hour respectively).

The international survey was made of 1,800 drivers living within ten miles of the center of these four major European cities and driving cars valued at up to £15,000.

Typical car costs were included, e.g., a road tax, maintenance, insurance, petrol, and parking, plus they took depreciation over the year into account.

Overall owning and maintaining a typical car like VW Golf from 2006 in London will cost you (annually):

  • £140 tax in taxes
  • £60 permit
  • £450 insurance
  • £300 in maintenance

Besides, here is an example of spending for a 6-year-old Smart Car if you use it only on weekends:

  • Fuel (petrol) – £35 per month
  • Insurance – £77 per month
  • Road tax – £30 per year
  • MOT – £25 per year
  • Repairs – £200 per year

That comes to about £1,599 per year.

In addition, you will need to check with your council if there are any parking permits in the area you live or work. Depending on where you shop, work or visit, you may also need to pay for parking at your destination – in more central areas; this quickly adds up.

The main expenses for a typical car in London are:

  • £2,150 per year in fixed costs (tax, insurance, MOT & servicing)
  • £1,000 per year for fuel
  • £100-150 per year for a parking permit (zone 2 or 3)

Insurance can range between £500-1,000 per year depending on your age, history, etc. Find cheapest providers in this article.

Here is the breakdown of annual expenses for running a typical car in London:

ItemCost per year
Car payment (if applicable)£2,328
Insurance (new driver, aged 17-24)£500
Vehicle tax£155
MOT & servicing£270
Fuel (for a petrol car)£1,000
Parking£200 as a minimum
Car depreciation£114
Running total:  £4,597 (£383/month) and £2,269 (£189/month) without a loan

For some people, that can be a lot of money. This is also why many London residents prefer traveling by subway, bus, or bike. Consider if your budget has room for these expenses.

In addition, public transportation is so well developed and cost-effective that owning a car doesn’t bring much value as it would in the US, for example.

Here is an overview of car ownership expenses you will encounter in London:

1. Car payment

Firstly you need to buy a car if you don’t own one yet. When taking a loan, a buyer needs to calculate a monthly payment as a recurring cost.

The average prices of the UK’s most popular new cars are between £12,000 and £36,000. At the same time, you will spend a few thousand on a used vehicle.

For example, the Ford Fiesta starts at around £18,000, and a very popular VW Golf starts at around £30,000s. According to the Nerdwallet, the average monthly car payment was £194.80 per month, with men spending £215.70 and women paying £173.30.

2. Fuel costs

London is the most expensive place to buy fuel in the UK, but the difference is just pennies when you look closer. On average, London’s drivers pay £1,000 for a petrol car and £1,300 for a diesel per year with standard vehicles.

This number depends on the number of miles you drive and your car’s fuel efficiency.

With an electric car, you can eliminate these costs, emissions and reduce your road tax liability.

3. Parking

If you own a car in London, you will need to find a place to park it. For many Londoners, that means renting out a parking space. Furthermore, if you rent in Central London, many apartments and houses simply don’t include a parking space. You will need to figure it out on your own.

Prices vary dramatically depending on where in the city you are, but some prestigious parts of Soho will charge several thousand pounds every year. You might also live in an area where you need a resident’s parking permit.

Consequently, parking expenses are hard to estimate, but most London drivers can expect to pay at least £200 a year. But if you have to park every day in a commuter car park, that figure might be closer to £1,000 or even more.

Besides, parking in central London is difficult to find and can be very expensive if you plan on staying all day. Prices can vary significantly with street parking in London, and in Westminster, the average cost is around £5.40, so for a day, you might end up paying over £40.

4. Car insurance

The average insurance price is £500 per year across the country, but you pay slightly more in London.

London has the UK’s highest insurance premiums and costs on average £679, followed by the North West at £552 and the West Midlands at £546. The cheapest car insurance premiums are charged in the South West.

The price can be significantly higher, especially for many young and new drivers. For instance, the average annual premium for new drivers between 17 to 24 of age is around £1,100 a year or more.

Besides, car insurance prices vary significantly from driver to driver. Some of the factors with the most considerable impact on the insurance premium are your age, the car you drive, your driving record, where you live, and where you keep your vehicle at night (e.g., on the street or in a garage).

What is the cheapest car insurance in the UK? Find out here or use online calculators like Confused.com.

5. Maintenance

Cars in London need to go through MOT test. It’s how the government checks your vehicle meets national safety and environmental standards.

It usually applies to cars aged three years and older. They need an annual mechanical check to ensure they are still roadworthy. You can expect to pay around £60 for this, though some garages will do it for less. Drivers should also have their car serviced at least once a year or every 12,000 miles.

A full-service costs around £150. Then you might need a battery replacement, which ranges from £45 to £250. If your car needs some major work, the average repair bill can cost between £406 to £833, depending on the manufacturer.

A basic service in the UK costs around £125, plus extra for any parts or repairs that are required.

Newer cars typically have fewer problems and are under warranty for the first few years. That will limit the amount you spend on service and repairs. At the same time, older cars need more care.

As a rule of thumb, you should count on an average service cost of around £270 a year while driving a car in London. 

6. London’s fees and taxes

Do Londoners have to pay to drive in London? Well, yes and no. Driving in London is free, but you might need to pay a fee to pass through certain areas. In highly congested parts of London, drivers are required to pay an £11.50 daily charge for driving in the city.

However, if you live in the congestion charge zone, you can apply for a 90% discount.

Where is the congestion charge zone in London? The congestion charge zone is around the city and zone one areas of London, e.g., Clerkenwell, Marylebone, Westminster, Lambeth, Southwark, City of London, Covent Garden, and Mayfair. You can find a map on TfL’s website here.

Additionally, you have to take care of the annual flat rate of road tax or vehicle tax which is £155. There’s a £10 annual discount for alternatively fuelled vehicles (hybrids, mild hybrids, and plug-in hybrids). You can calculate your road tax on this website.

7. Depreciation

Although you don’t make monthly payments for depreciation and so many people even don’t consider it. But you do lose some money every year, especially if you bought a new vehicle. In fact, in their first year, cars lose around 15% to 30% of their value.

For used cars, it’s more between 10% and 18% annually.

Cost of owning a car in London per month

telephone booth alongside the busy street in London, UK.

To own a car in London costs about £383 per month with a car loan and £189 per month if financed with cash.

You can expect to spend about:

  • £83 on fuel
  • £41 on car insurance
  • £12,9 on tax
  • £16,6 on parking
  • £22,5 on MOT
  • £9,5 on car depreciation

However, these numbers are relative, and you might pay less or more for your vehicle in London. For instance, some drivers end up spending hundreds of pounds on just parking every month.

What percentage of Londoners own a car?

London is already full of cars. In fact, there are 2.6 million registered cars in the UK’s capital alone. Despite London’s population of about 8 million, that doesn’t sound high, yet 54% of London households have at least one car.

When you add to it public transport, London is a very busy place. This is also a reason why many people avoid owning a car and instead use public transportation, which is excellent.

While some people may feel they need a car, London has great public transport so you can get around London easily without one. Lots of people have even turned in their keys for walking, cycling, train, and buses.

With this said, owning a car in London has its benefits and gives a significant amount of freedom that most of your fellow citizens won’t have access to.

Is it expensive to own a car in London?

When compared to the European average, owning a car in London is very expensive. Yet, the cost of living in the UK’s capital is also the highest in Europe after Switzerland. You can expect to spend between £2,000 and £4,000 each year on running and maintaining a car in London.

Latest research has found that driving in London costs £18.88 per hour, which was more expensive than in Paris, where drivers paid £18.55 per hour to keep a car, while car ownership in Barcelona or Madrid was significantly cheaper.

Taxes on car in London

London also has special charges for car drivers in certain city zones. Some of the busiest parts of town are also the most expensive to drive in. It’s called a Congestion Charge and is a £15 daily fee for driving within the Congestion Charge zone.

It applies only to driving between 7:00 and 18:00 Monday to Friday and 12:00-18:00 Sat-Sun and bank holidays. There is no charge between Christmas Day and New Year’s Day bank Holiday.

The easiest way you can pay this tax is by setting up Auto Pay. There are also a few exemptions and discounts of this charge drivers can benefit from.

Average cost of running a car in London

The average cost of running a car in London is £2,000 a year. This includes everything from MOT, tax, parking permit, insurance, petrol, etc.

Additionally, it’s always good to have a few thousand in savings in case things go sideways.

Here is an example of how much it costs to run a VW Golf from 2006 in London:

  • £140 tax in taxes
  • £60 permit
  • £450 insurance
  • £300 in maintenance
  • £900 in fuel
  • Total: £1,850 per year

If you take a car with a car loan, you should calculate about £200 per month for a loan payment.

Car ownership is slightly more expensive in London than average in the UK. This is mainly because of the higher insurance premium, parking costs, and city taxes.

Do you need a car in London?

Before you commit to the vehicle and all its costs, it’s good to consider whether you need a car in London. Few things to think about:

Where you work

If your job is significantly far away from your home, this can be an issue. You also might need a car for business purposes to transport some stuff.

Yet, if you work in central London (zone 1-2), driving doesn’t worth it. It will cost you a lot of additional charges, troubles when parking, and many other challenges. Public transport or even a bicycle will be a better choice.

Where you live in London

Another major factor is where you are located within the city. London is huge, and people living on the outskirts of Greater London will spend a lot of time commuting to the center. Overall, the distances can be far greater to the nearest station, shopping center, and general amenities.

In that case, it might be worth having a car.

The more central you live, the fewer the possibility that you need a car. Unless you make a lot of money that it’s just not a big deal.

Personal choice

You might also want a car because of all benefits it brings without a huge need for it. It will allow you to go on random trips, do grocery shopping, and be more flexible.

Indeed, a car can mean a great sense of freedom and not having to rely on anyone and anything for your commute. However, with London’s excellent public transport, the general answer is no – you don’t need a car in London.

You truly have endless options. You can choose between the underground tube, trains, busses, Uber, taxis, car rentals, and Zipcar. In the end, have you seen London’s traffic?

Also read whether a foreigner can buy a car in the UK or not.

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