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Cost of running a car for young drivers is at cheapest level in a decade

The cost of running a car for young drivers is at its cheapest level in nearly a decade thanks to a drop in insurance and fuel prices

  • On average, young drivers will now pay £2,074 to run their car in the first year 
  • The average car insurance premiums for young drivers overall is now £1,095 
  • A decrease in the price of insurance and fuel is the reason for the drop  

The cost of running a car for young drivers fell £296 annually, new research has revealed.

On average, a driver under 24 will now pay £2,074 to run their car in the first year – the cheapest annual running cost since 2015, according to data from Compare the Market.

A decrease in fuel prices and insurance costs, mainly as a result of fewer cars being on the road during the pandemic in the last year, have been given as the reason for the plunge.

Meanwhile, the average car insurance premiums for young drivers overall is £1,095, the cheapest figure since 2012.

The cost of running a car for young drivers is at its cheapest level in years due to the pandemic

The research compared the prices of running a car for young drivers from November 2019 to January 2020 to November 2020 and January 2021. 

It found the cost of driving had been rising in recent years, approaching a point where it would have been unaffordable for many young people.

However, over recent months, the drop in the cost of insurance and fuel has balanced out the increases seen in previous years.

Car insurance is still responsible for 53 per cent of overall car running costs but this cost has declined dramatically in the last year as the pandemic has reduced the number of cars on the road.

The average car insurance premium for young drivers now stands at £1,095, representing a £169 – equivalent to 13 per cent – drop year-on-year and the lowest average cost since Compare the Market’s research began nine years ago. 

The cheapest premium available to young drivers has also fallen by £113 year-on-year to cost an average of £918.

COST OF RUNNING A CAR FOR 17 TO 24 YEAR OLDS (NOV 2020 TO JAN 2021)
Cost name Cost % of total cost
Insurance £1,095 53%
Fuel £763 37%
Est. VED (Road Tax) £125 6%
MOT £55 3%
Breakdown cover £36 2%
Total cost per year £2,074 100%
Source: Compare the Market   

This means young motorists could typically save an additional £177 by switching to the best deal when their policy comes up for renewal.

In addition, annual fuel costs have plunged in recent months as the price of petrol has fallen and motorists expect to drive fewer miles in 2021.

A typical young driver will now spend £763 on fuel, driving an average of 7,347 miles over the course of a year.

This cost has dropped from £884 at the start of 2020 when the average young motorist drove for 7,480 miles.

Despite these savings, separate research from Compare the Market last year, found that 47 per cent of young drivers with a full or provisional driving licence said the financial impact of coronavirus made it harder for them to afford the running costs of their car.

CHEAPEST CARS FOR YOUNG DRIVERS TO INSURE 
Model Average Premium Average Value
Volkswagen Up! £636 £4,542
Citroen C1 £704 £2,764
Peugeot 108 £705 £4,553
Hyundai i10 £719 £3,670
Fiat 500 £723 £4,082
Ford Ka £745 £2,207
Vauxhall Adam £747 £5,409
Kia Picanto £762 £3,145
Toyota Aygo £775 £3,825
Peugeot 107 £776 £1,585

Although motoring costs are down for now, the wider economic impact of the pandemic on younger generations means many are still feeling the pinch.

Dan Hutson, head of motor insurance at Compare the Market, said: ‘Young people will be relieved that the cost of driving has fallen so dramatically and this will hopefully ease some of the financial strain many are under.

‘With young drivers paying the highest insurance premiums, the recent drop in prices should prevent policies from becoming prohibitively expensive but the biggest savings will only be available to drivers who shop around for the best deal.

‘Young drivers should also remember to speak to their insurer if their current or expected mileage has reduced due to the pandemic, to see if a reduction in premium is possible, and explore whether a telematics based policy could be cheaper for them.’

Motorists are also set to experience higher fuel costs than they were paying before the current lockdown measures were put in place, with pump prices surging on the back of oil increasing at the start of 2021.

Latest figures show that petrol is 7.5p-a-litre more expensive than it was in December and experts have predicted it will continue increasing over the coming months.

Is it time for graduated driving licences? 

There are renewed calls for the Government to introduce graduated driving licences as a method of reducing the number of crashes involving new drivers. 

The Commons Transport Select Committee said there is evidence that such licences can be ‘effective in reducing crash rates’. 

The licences would mean motorists who have recently passed their tests will  have tougher restrictions for a certain time period.

This could include not being allowed to carry passengers, having to abide by a curfew, lower alcohol limits and mandatory P plates.

They are used by several nations including the US, Canada, Australia and Sweden. 

Previous calls to introduce the licences were squashed in October last year due to the affect not having a driving licence could make on young people’s employment chances. 

This means the only special treatment for new drivers is they lose their licence if they receive six penalty points within the first two years, rather than the standard 12 points.

Speaking about the calls for graduated licences to be reconsidered, RAC road safety spokesman Simon William said: ‘Younger drivers are over represented in serious road casualty statistics, so there is clearly more that can be done to improve road safety. 

‘While some sort of graduated driver licensing could undoubtedly bring benefits, there are also opportunities to improve the current system. 

‘A minimum learning period and an end to intensive courses could help ensure new drivers are better prepared once they pass their tests. 

‘Encouraging the take-up of telematics-based insurance policies may also play a crucial role once drivers pass their practical tests as they are very effective at positively influencing driver behaviour.’

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