Annual Car Costs Have Increased in 2022

It's been a difficult year for millions of people in the UK, with the cost of living crisis seeing essentials including food, gas, electricity, and fuel dramatically increase in price due to the highest inflation rates we've seen in 40 years.

As a result, people have to cut back on everyday items that have become too costly to afford, and we are now experiencing the coldest days of the year, with many unable to put the heating on to keep warm.

Despite efforts from the Government to subsidise gas and electricity prices, it's not been enough to help the most vulnerable within our society. At this moment in time, it's tough to know how or when this period of hardship will end.

Do you currently have a car on finance and can't afford to make your repayments? We could help you refinance your deal today.

If you own a car, whether that be outright or on finance, you would have noticed a rapid rise in the cost of necessities like insurance, servicing, MOTs, and of course, fuel.

Though many may deem owning a car a luxury, millions of people rely on one to get to and from work to pay the bills, take their children to school, or look after elderly relatives, among other things.

Everyone is feeling the pinch of the rise in goods, and as a result, the automotive industry is noticing a trend that many more people are taking up every week to reduce costs.

Startline Motor Finance is a provider of specialist finance solutions to the UK motor finance market, working with prominent franchised and independent dealers, and their 'Used Car Tracker' unveiled some interesting results in November.

Cost of living crisis' effect on the auto industry

They identified that the average motorist's annual spending on fuel, insurance, servicing, and car finance, had risen by £80 per month. That means that over a year, average annual car costs have risen by almost £1,000 since the start of 2022.

As expected, fuel has seen the greatest increase, with road users paying up to £37 per month more to fill up their cars than they were in 2021. Insurance and finance also rose by around £20 per month, though.

As a result of the increased costs, many families were thinking of selling or downsizing their cars to reduce their monthly outgoings.

Startline Motor Finance's, CEO, Paul Burgess, said: “For a lot of drivers, an annual £960 hike in motoring costs is money that they can’t easily find. Last month, our research showed that one in four families were thinking of selling their car or perhaps downsizing from two cars to one – and this really underlines why.

“The latest finding puts into perspective just how much rising motoring costs are affecting ordinary people who need their car to simply get to work, take their kids to school and drive to the supermarket.”

When will the cost of living crisis end?

Everyone is being a lot more cautious with their money this year, and we could see that roll into 2023 and beyond. There's no evidence to suggest that the cost of living crisis will end anytime soon.

It's not only the general costs affecting people, though. With rising costs comes extra pressure on businesses to reduce their outgoings, so job loss is a big concern for many.

Burgess continued: “It’s evident that personal finances worries are increasing. More and more, people are feeling the pressure of the cost of living crisis and thinking about what their next used car will cost to buy and run.

“However, it’s also worth mentioning that the used car market remains in good shape. We’re seeing no slowing of demand as a company, and our survey also shows little change in how likely people say they are to buy a used car. It’ll be interesting to see if and how this changes over the next few months as the cost of living crisis bites deeper.”

Can I refinance my car?

At Car Credible, we're seeing more people consider the refinance option, which is something not every car finance user is aware of.

Car refinancing is the process of taking out a new finance agreement to pay off the outstanding balance on an existing car finance loan.

When you initially took out your finance deal, you may have agreed to a length of term or repayments that you now want to change. In other cases, your credit score may have improved, so you could be eligible for a better interest rate.

Whatever your circumstance, Car Credible could help you refinance your deal. Alongside our finance partners, we guarantee to find you the best option to suit your needs and budget.