The true cost of a car: what my 2013 Ford Fiesta taught me

The car I bought in a hurry

Back in 2015 I needed a car. My commute was over an hour each way on two buses, and I'd just started a job that made that untenable. So I did what most people do: I walked into a dealership, found a two-year-old Ford Fiesta on a 2013 plate with 12,000 miles on the clock for £10,000, and signed up for finance at the desk.

And yes — good luck getting a two-year-old Fiesta with 12,000 miles for £10,000 these days. Used-car prices climbed hard after 2020 and never fully came back down. The same car today would cost meaningfully more — which, if anything, only sharpens both lessons in this post: depreciation matters more than ever, and so does not overpaying on the finance on top.

The rate was bad. Genuinely bad. I didn't compare a bank loan, I didn't look at a credit union, I didn't price up a 0% deal elsewhere, and I certainly didn't sit down and work out the true cost of the thing. I needed a car, the monthly payment looked manageable across five years, and that was the entire extent of my analysis. If you'd asked me what the car would actually cost me, I couldn't have told you.

That's the part I'd change. Not the car — the lazy ten minutes I didn't spend checking whether the dealership rate was any good. It almost certainly wasn't, and on a balance of a few thousand pounds over five years, a poor rate quietly skims hundreds of pounds you'll never see again.

The plot twist: it was a brilliant buy anyway

Here's what I got right, mostly by accident.

That Fiesta served me for over ten years. Low mileage when I bought it, reliable the whole way through, and cheap to run — my most expensive year was around £600 in parts and labour, and I did a fair bit of the basic servicing myself to keep costs down. I've since handed it over to my dad, who's still running it today.

A bad finance rate on a car that gives you a decade of low-cost service is a very different thing from a bad finance rate on a car you churn every three years. The finance was the mistake. Buying a sensible used car and keeping it for the long haul was the thing that quietly saved me a fortune — I just didn't know it at the time.

The lesson in one line: the monthly payment everyone fixates on is the least important number. What a car really costs you is decided by two things most buyers barely think about — how fast it depreciates, and how long you keep it.

What a car actually costs

The sticker price is not the cost. Most of that money turns into a car you can resell — so the real cost of owning a car is the part you don't get back. There are three pieces:

• Depreciation — the value the car sheds while you own it. For most cars this is the biggest cost by a distance.
• Finance interest — what the borrowing costs you, if you didn't pay cash. Real, avoidable, but usually smaller than people fear.
• Running costs — insurance, tax, fuel, servicing and repairs, which creep up as the car ages.

The reason buying used and keeping it matters so much is depreciation. A new car typically loses 15-20% of its value a year, and the steepest drop is in year one — often 20-30% the moment it leaves the forecourt. By buying my Fiesta at two years old, someone else had already eaten that brutal first chunk. And by keeping it for a decade, I spread the remaining depreciation across ten years instead of three. Cost-per-year of ownership falls every single year you hold on.

The same car, two strategies

To make it concrete, here's the rough shape of two ways to put a car on your drive — run through the calculator below. Numbers are illustrative; the point is the pattern, not the penny.

Same family hatchback, wildly different cost of ownership — and that's before you add the finance interest the new-car buyer is more likely to be paying. Buying used and keeping it isn't glamorous, but on the maths it's one of the highest-impact money moves available to most UK households. My accidental Fiesta strategy turned out to be roughly the cheapest way to own a car going.

The finance bit I got wrong — and how to not repeat it

Depreciation is the big cost, but the finance rate is the avoidable one, and it's where I tripped up. Dealership finance is convenient, which is exactly why most people stop shopping the moment they're at the desk. Rates vary enormously, and the desk is rarely the cheapest option.

Before you sign anything, get at least one independent comparison:

• A personal loan from your bank or a credit union — often cheaper than dealer finance, and you own the car outright from day one.
• A genuine 0% manufacturer offer, if one exists on the model — but check it isn't traded off against a discount you'd otherwise get for paying cash.
• Cash, if you have it — no interest at all, though you should weigh what that money would have earned invested (the calculator shows this too).

The calculator lets you flip between PCP, HP, a bank loan and cash and watch the total cost change. Ten minutes doing that in 2015 would have saved me real money. It's the single easiest win in the whole car-buying process, and the one almost everyone skips.

If you take one thing from my mistake: never accept the first finance rate you're offered. Compare the total cost — not the monthly payment — across at least two options before you sign.

Why we're now a one-car household

The other half of this story is what changed. I work from home now. When I sat down and actually looked at it, two cars in the household didn't make sense any more — the second car was mostly sitting still, quietly costing us in tax, insurance, servicing and depreciation for the privilege of occasionally being useful.

So the Fiesta went to my dad, my partner upgraded, and we run one car between us. I'm no longer paying for a car directly — though I'll happily admit I now pay indirectly, through a higher tax, fuel and maintenance bill on the car we kept. But the sums are smaller, and the money that used to disappear into a second vehicle is doing something far more useful sitting invested.

That's the quiet version of wealth-building: not a dramatic windfall, just removing a recurring cost that wasn't earning its keep and letting the difference compound. A car you don't need is one of the most expensive things you can own.

The tool I wish I'd had in 2015

This calculator is, very literally, the thing I'd have loved to use before walking into that dealership. Punch in the car, the finance, how long you'll keep it and the running costs, and it gives you the honest total — the true cost of ownership, broken into depreciation, interest and running, plus the all-in monthly and what the same money could have grown to invested instead.

It won't tell you not to buy the car. Mine was a great buy. What it does is make the trade-off visible before you commit, so the decision is a choice rather than a monthly payment you talked yourself into.

Frequently asked

This is general information, not financial advice. The figures here are illustrative and depend on the inputs you provide. For decisions involving significant sums, please consult a qualified FCA-regulated financial adviser.