Ten rip-offs that drive motorists mad

Petrol costs 62p a litre in the US, versus 135p here, but the motoring scams don't end there!

According to the latest survey from the AA, the standing charges for a car priced at £16,000 to £20,000 total more than £4,100 a year. These standing charges include depreciation, car insurance, borrowing costs, breakdown cover and Vehicle Excise Duty ('road tax').

However, they do not include running costs, such as petrol, tyres, servicing and repairs, and parking charges. These extra expenses could easily add another £3,000 a year to the cost of running a car.

Owning and running a modest family car could cost you upwards of £150 a week!

Ten motoring swindles

So, what really drives motorists mad? I'd put these 10 rips-off at the top of my list:

1. Fuel prices

In its latest fuel-price report, the AA found that unleaded petrol costs 135p a litre, with diesel costing 140p/litre. This means that the UK now has the third-highest diesel price in Europe and the eleventh-highest petrol price.

Why is fuel so expensive here, when unleaded costs 62p/litre and diesel costs 65p/litre in the US? The simple answer is that almost all of this difference is accounted for by sky-high fuel taxes on this side of the Atlantic. Check out The cheapest petrol in the world! for more.

2. List prices

Car prices in the UK are usually considerably higher than those in the rest of Europe. This has led consumer groups to criticise motor manufacturers, claiming the UK is a 'Treasure Island' for bumper profits.

However, when you go looking for a car, always remember that the list price is merely the maximum price you can pay. By shopping around, you could get up to a third off this list price, depending on the make and model of vehicle you're after. Be sure to read A clever way to save a packet on a second-hand car.

3. Car insurance

Thanks to rising legal bills and compensation payouts, the cost of car insurance has soared in recent years. In its latest British Insurance Premium Index survey, the AA found that the average 'shoparound' premium for comprehensive cover is now £924 a year. However, premiums are much, much higher for young drivers and in Northern Ireland.

There are ways to cut your spend on car insurance though, as we explain in 25 ways to cut your car insurance.

4. Dealer finance

When you buy a car, the dealer will be desperately keen to sell you a whole host of finance and insurance ('F&I') add-ons. However, these financial products are sure to be inferior to the Best Buys available in the wider market.

For example, taking out finance via a car dealer is almost always a bad decision. Indeed, the AA reckons that you could save £2,000 with a Best Buy personal loan. So, always shop around for cheap loans before you visit the showroom.

5. Service stations

Motorway service stations know that they have a captive audience, so they charge premium prices for everything they sell. As a result, meals, snacks and drinks are much more expensive than they are on the high street. In some cases, these price tags can be twice as high as those found in supermarkets.

Hence, before you head off on a long journey, make sure you've filled up with cheap fuel, and take a packed lunch or sandwiches with you. If you do visit a service station to use the loo or buy a newspaper, don't be tempted into paying a fortune for fast food.

6. Car care

In the brilliant Martin Amis book Money, John Self -- the lead character- refers to his local garage as "the den of thieves", because his 'Fiasco' sports car spends all its time there.

Frankly, John Self isn't far wrong, because branded dealerships can and do charge up to twice as much as independent garages. Since October 2003, you can have your car serviced wherever you like, so you don't have to stick to a motor manufacturer's own garages. In my experience, using a reputable, independent garage can halve your bills, helping to cut the cost of servicing, repairs and maintenance.

7. GAP insurance

Let's say that you buy a car for £10,000 and, with additional finance costs, you owe £12,000 in total. A few months later, your car gets written off in an accident, but your insurer offers you a 'total loss' settlement of only £7,500. This could leave you owing your lender thousands of pounds.

To cover this shortfall, you could buy GAP (Guaranteed Asset Protection) insurance, which will clear your outstanding debt in this situation. However, you should never buy this protection from car dealers, as they charge a fortune for it. Indeed, shopping around for Best Buy GAP insurance could save you as much as £500.

Check out Another rip-off insurance to avoid for more.

8. Breakdown cover

The market for breakdown cover (roadside recovery) is dominated by three well-known providers: the AA, the RAC and Green Flag. Alas, a full-service policy from these companies can cost as much as £150 a year, versus just £38 from 'pay and claim' cover from AutoAid.

9. Payment protection insurance (PPI)

Payment protection insurance pays your monthly repayments on a loan if you can't work because of an accident, sickness or unemployment, and repays your debt if you die.

However, the PPI on sale in dealerships is incredibly expensive and should be avoided at all costs. For market-leading loan PPI, look to the likes of British Insurance and Paymentcare.

10. Car warranties

Finally, car salesmen love to sell extended warranties to unwary car-buyers, as these over-priced protection policies pay generous commissions to their sellers. Then again, why pay, say, £500 for an 'official' extended warranty, when you can buy similar cover for £100 from  providers such as Warranty Direct?

Here's hoping these 10 tips will help you drive down the cost of your motoring!

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