EntertainmentThe Cost of Driving A Car: Australia Vs. the UK

The Cost of Driving A Car: Australia Vs. the UK

January 06, 2015

The cost of driving a car depends on so many factors. First, there’s the vehicle itself, with some designed for fuel efficiency and others designed to withstand everyday wear and tear, or a combination of both.

Then there is the amount you actually drive your car. Some cars make it worthwhile to drive a lot, while others are better value if you only use them every couple of days. After that, you have to consider the cost of things like registration and insurance (not to mention servicing to help keep the car running).

And, of course, there are car loans to consider. The type of car loan you choose, and the interest rate you end up getting can have a huge impact on the total cost of having a car.

But another major factor that seriously affect the cost of driving a car is where you are. The price on the things mentioned above varies from state to state in Australia and from country to country around the world.

We have already considered how much it costs to drive in New Zealand, and in the United States, compared to costs in Australia. So now we thought it would be good to explore how the UK matches up with us when it comes to different car expenses.

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A note on the comparisons below

  1. Car loans
  2. Licence fees and registration
  3. Fuel
  4. Insurance
  5. Roadside assistance


A note on the comparisons below

Price comparisons between countries can vary significantly depending on the exchange rate, which fluctuate on a daily basis. As such, it is important to realise that the Australian and UK dollar/pound values could be different from when we publish this article to when you read it. The same goes for interest rates on car loans, actually.

But the point of this comparison is to look at the cost of running a car on an individual and personal level, not from a larger-scale, economic perspective. It’s designed as a fun and interesting way to get a sense of the difference between car costs in Australia and the UK. You could even use the data here for a more in-depth comparison if you wanted to.

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Car loans

The cost of a car loan depends on three key things: the price of the car, the interest rate applied by the lender and the length of the loan. For the sake of this comparison, let’s say we’re looking at car finance for a new vehicle worth $25,000 (or around £13,213), and car loans with a five-year term.

In Australia, you would be looking at an interest rate of around 8.99% p.a. (as of December 2014), so you would pay $519 per month to a total of $6228 for the year.

Average car loan interest rates in the UK are actually quite similar at the moment, with the average annual percentage rate around 9.8%. At this rate, you would pay £279.44 or around AUD$528.95 per month. The yearly total if you had this interest rate in Australia would be $6347.40, leading to a total loan cost of $31,737.13.

While car loan interest rates between Australia and the UK are not that different in December 2014, this particular comparison highlights how important it is to shop around for loans with the best interest rates. After all, they can vary significantly not just by country, but also between provider wherever you are.

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Licence fees and registration

When comparing licence fees and registration costs in Australia to anywhere else, it’s important to realise that these fees actually vary from state to state. So for the sake of this comparison, we’ve decided to look at the costs for a new vehicle in NSW/ACT.

Here, a 12-month unrestricted drivers licence costs $54, and the annual registration fee is $62, totalling $116 for the year. This amount can also be reduced by getting licence for a three or five-year period, but the 12-month rate works better for this kind of comparison.

In the UK, your licence costs £43 ($81) but does not need to be renewed unless it is revoked or there are other unusual circumstances. When it comes to registration, there is a one-off fee of £55 ($104), which would total £98 for the first year if it were just these two elements that needed to be considered.

But cars in the UK also face ongoing “vehicle tax” based on the fuel type and carbon dioxide (CO2) emissions. For a small new car with CO2 emissions of 119, such as a Mazda3, you would be looking at around £30 per year. That brings the total of official fees for driving the car up to £128 for a year.

Cars that are more than three years old also have to have a yearly assessment known as a MOT (Ministry of Transport), kind of like our registration assessment. The standard cost set by the UK government is £54.85, but it varies depending on where you get it done.

When all of these costs are considered it is clear that fees are not only more segregated in the UK, but also considerably more than we pay here in Australia at the moment.

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Petrol is one of the biggest ongoing costs of running a car, whether you’re in Australia or somewhere else in the world. While the price at the pump is something we’re all familiar with, adding up the cost over a year is less common. But let’s take a look now and see how it compares to costs in the UK.

The national average for Unleaded Petrol in November 2014 was 140.5 cents per litre, according to data from the Australian Institute of Petroleum. To work out the yearly cost, it’s important to consider the type of car and the distance driven.

So, let’s say we’re looking at a new small car like the 2014 Mazda 3 Neo, which has a fuel consumption of 5.7 litres per 100km. Driving a modest average of 15,000 kilometres per year would use about 855 litres of fuel, and based on the petrol cost listed above that works out to be a total of $1201.28 in petrol for a year.

In contrast, the UK Department of Energy and Climate Change reported a rate of 122.29 pence per litre, or £1.22, in November 2014. With the same car as the scenario above, and the same distance, someone in the UK would be looking at £1043.10 for a year.

For a different perspective, if you translated these figures to Australian dollars, you would be looking at petrol prices of $2.31 per litre, and a total yearly spend of $1974.49. While factors like the cost of petrol and the exchange rate can change overnight, this particular scenario shows that petrol is much more affordable in Australia at this point in time.

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Third-party insurance is compulsory in Australia and the UK, but most experts also recommend getting comprehensive car insurance to help cover the cost of any other issues. With that in mind, we have focused on comprehensive car insurance for this comparison.

For a small car like the one we’ve considered in scenarios so far, insurance can range from $800 to $1800 depending on the insurer and level of cover provided. But the average price is around $1200 annually. In the UK, it could range from £600 to £1400, but most are around £700, which is only a little more than what we pay in Australia.

It’s also worth noting that most insurance companies in the UK give people the option of paying for insurance on a monthly or yearly basis, with yearly payments significantly cheaper. We’ve focused on the yearly payment for this comparison, but the monthly could be an extra £100 or so on top of the prices above.

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Roadside assistance

Roadside assistance companies are designed to make it easier for you to deal with any unexpected breakdowns or other car issues. The idea is that if you become a member, you get access to support and basic services such as tyre changing or towing at a more affordable cost than if you had to call a garage out of the blue.

Roadside assistance services in Australia, such as the NRMA in NSW and the RACV in Victoria, all have their own membership prices and service options people can consider. For instance, if you signed up for basic coverage with NRMA in NSW, you would pay $108.50 per year. In contrast, you would pay $97 for RACV membership in Victoria and $84 with RACQ in Queensland.

In the UK, basic membership for AA or RAC starts at £27.99 and covers just roadside assistance. Some features, such as transport to another location when your car can’t be fixed on the roadside, at-home support, parts and garage cover and battery replacement, are included as standard here in Australia, but treated as add-ons in the UK. The most premium membership for AA, for example, is £124.99 per year.

What this shows is that different roadside support companies around the world include different features that could affect prices accordingly. So, just as with car loans or insurance, reading through the terms and conditions will help you make a choice about these services whether you are in Australia or in the UK.

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Despite differences in currency, there are actually a lot of similarities when it comes to the cost of driving a car in Australia and the UK. The biggest difference is probably in regards to licence fees and registration, which seems much more straightforward here than it is over there – as well as more affordable.

The cost of roadside assistance, on the other hand, is easier to work out in the UK than in Australia, and the basic cover cost of £27.99 roughly translates to $53 Australian dollars, which is quite a lot cheaper than we would pay with most companies here.

What this comparison – as well as the previous two comparisons ­– highlights is that there are a few key things to consider when looking at the cost of driving a car. Firstly, it will be a big expense pretty much anywhere in the world (or at least that we’re yet to do a country-by-country comparison that says otherwise). Secondly, a major part of the cost comes down to car finance and the price of things like fuel.

But perhaps the most important think we’ve found from these comparisons is the value of information. If you are aware of the cost of different things like insurance, petrol, car loans and roadside services, you can shop around to get the best deal for your circumstances. And that is a valuable process no matter where you are in the world.

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