Five Tips For Cheaper Trips

Thanks to the rising price of fuel, motoring is becoming increasingly pricey. Here are five car costs just itching to be cut!

Each year, motoring organisation the RAC releases its Cost of Motoring Index. This tracks all the costs of owning and running seventeen popular models of car. According to RAC research in mid-2007, it cost £5,627 a year to keep an average family car on the road. Here's how this figure breaks down:

Thus, in the second quarter of 2007, it cost a little over £108 a week to run a medium-sized car. However, given the steep rise in fuel prices over the past year -- plus higher depreciation, finance and insurance costs -- I expect the RAC's figure for 2008 to be considerably higher. Hence, I predict a rise of up to 10%, so watch this space later in the year...

Consequently, what can motorists who are feeling the pinch do to curb their car costs? For starters, we've rounded up dozens of money-saving ideas for motorists in these four articles:

         Cut The Costs Of Motoring Abroad

         The Fool's Guide To Fuel Economy

         Ten Ways To Cut Your Motoring Costs

         Money Talk Podcast: Cut Your Motoring Costs

However, to keep things simple, I'd like to introduce a simple acronym which you can use to trim your car's running costs: SMIFF. This stands for:

Servicing

Four years ago, my wife bought a one-year-old car from our local Renault dealership. However, she has never had her car serviced by this main dealer, because its quotes are much higher than those of our local garage. For example, Mrs D has just paid £140 for her latest service at this reliable, independent outlet. Our nearest Renault dealer wanted £260 for the same service, so my wife saved £120 by shopping around. That's almost half the price (46%) off!

MoT

Likewise, my money-mindful missus doesn't use garages for her yearly MoT test. Instead, she books our car into the local council's MoT testing centre. As this centre doesn't carry out repairs, it has no incentive to `discover' faults and needless repairs. So, to avoid being landed with unwarranted repair bills, contact your local council or visit its website to find your nearest government-run MoT centre.

Insurance

The RAC's report identified motor insurance as the fourth-highest motoring expense, after depreciation, fuel and finance. Of course, there are two big problems with insurance. First, it's not optional, as you are obliged by law to have at least third party-only cover. Second, this a hefty annual expense, as it can cost upwards of £600 a year for fully comprehensive insurance.

Last week, in Five Steps To Cheaper Car Insurance, I suggested ways to prune your premium. However, these articles will also help you to find quality quotes: The Easiest Car-Insurance Trick, Ten Specialist Car Insurers, Drive Down The Cost Of Car Insurance and Cheaper Car Insurance In Ten Steps. By the way, our search engine checks 97% of the online car insurance market to find you the unwarranted best deal.

Fuel

In Five Ways To Cut Your Petrol Bill and Cut Your Petrol Bill By 50%, my Foolish friend Szu Ping Chan came up with more ways to improve your car's fuel economy. However, I'd like to name-check the PetrolPrices.com website again, because it checks the prices at 9,737 petrol stations each day. For example, a quick check reveals that the cheapest diesel in my area is 124.9p, and the most expensive is 145.9p. That's a difference of 21p per litre, or £12.60 for a sixty-litre fill-up.

Finance

Finally, we come to finance, which is third in the RAC's table of motoring costs. Your goal when arranging car finance is surprisingly simple: to minimise your TAR (Total Amount Repayable). This is the overall cost of credit, including your monthly repayments and all fees. Then again, you can choose from a whole host of different finance agreements, such as hire-purchase, personal leasing, personal contract hire, and personal contract purchase (PCP). I explained the process and cons of each of these options in Tremendous Tips For Motorists.

From personal experience, I prefer to use good old-fashioned cash when buying a car. As well as not paying any interest (although I do lose savings interest), cash enables me to negotiate a deep discount from the list price. On the other hand, if my savings were too low, then I'd probably opt for a low-cost personal loan, rather than dealer finance. One advantage of a personal loan is that you own the car on day one, so it won't be seized if you fall behind with your monthly repayments. For help with choosing the perfect personal loan, read Fifteen Tips For Using Unsecured Loans.

So, once again, to keep a keen eye on your car costs, remember SMIFF: Servicing, MoT, Insurance, Fuel and Finance!

More: Find quick quotes for car insurance | Slim Your Waistline, Not Your Wallet | Current Discounts And Deals #66