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Cost of driving has risen 9% in just six months

Written by on 6 April, 2010

The average annual running cost for drivers has reached £2,539 after a huge rise in insurance and petrol prices, research has shown.

The report, from Sainsbury’s Finance, shows that the average annual cost of keeping a car on the road has increased by a steep 9%, from £2,338 last October to a current £2,539. The amount is inclusive of car insurance, servicing and 10,000 miles worth of fuel, but does not include interest repayments on loans taken out in order to purchase cars.

The higher costs in motoring mean that the prices drivers are facing to maintain their vehicles are now over 20% higher than they were in 2007 – a massive £438 increase. The biggest cause of the price hike is down to higher fuel costs and rising insurance prices, Sainsbury’s research found.

Car insurance has hit drivers the hardest in the past five months, increasing by 11% to an average of over £600 per year – almost 40% more than it was back in September 2007. What’s more, the research follows a report last month by the AA which estimated the continuing rise of car insurance. The study found that an average annual premium for comprehensive car insurance had gone up by more than 18% last year to a price of over £1000, and the figures are predicted to continue rising in 2010.

Fuel alone has also seen a huge increase of over 10% since October 2009, so that the average motorist is now forking out £1,398 per year just to fuel their vehicle. Car tax has seen a milder increase, but has nonetheless risen by 3.4% in only five months while servicing is only costing 1% more than it did back in October, and MOTs remain the same.

The bad news is already set to continue for motorists as since 1st April 2010, owners of newly registered cars can expect even higher running costs. Cars registered after this date are hit by a new higher tax set by the Government, so that in the first year of owning the new vehicle they are likely to be set back an extra £105.

Insurance is not the only cost predicted to be on the up; fuel prices are looking set to soar after oil prices have hit an eighteen month high. US crude oil has risen to almost $87, the most expensive since October 2008, and oil prices rose more than 8% in just one week. This is sure to affect UK drivers who are already suffering from the weak pound as well as fuel duty rises put into place after Chancellor Alistair Darling announced an initial 1p rise in the Budget.

Research from the AA has already shown that pump prices are nearing the record 119.7p per litre which drivers faced in July 2008. Though that record hit when oil reached $197 a barrel, the fast increase in oil prices mean it could soon reach new highs, leaving drivers even more out of pocket.

Commenting on the figures of the research, Sainsbury’s have advised that drivers shop around for their car insurance and cheaper servicing in order to keep costs down. The figures also revealed that 1.4 million drivers plan to buy brand new cars within the next six months, but Sainsbury’s Finance advises trying to haggle down the prices to lessen the overall costs now that the tax for newly registered cars has been put in place.

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