Cost-of-driving crisis could force millions to sell their cars

Drivers struggling with rising insurance and maintenance costs are considering selling their cars.

A survey by Carmoola revealed 17% of Brits had either sold their cars or were thinking about it, and almost a third (29%) had decided to drive less to save money.

In total, 20% of drivers said the cost of their car was a major blow to their finances.

A ‘cost-of-driving crisis’

The rising costs of car insurance, petrol and diesel have hit drivers at a time of severe economic pressure and high inflation.

On average, UK car owners spend upwards of £3,800 each year on petrol or diesel, insurance, repairs and servicing, parking, road tax and more.

Describing the situation as a ‘cost-of-driving crisis’, the survey predicts up to eight million Brits may be forced to sell their cars.

Older Millennials and Gen-Z are hit hardest by these increasing expenses, with nearly a third of 17-24 year olds considering selling their car. And a quarter of 35-44 year olds thinking about it.

Carmoola CEO Aidan Rushby said:

“It’s shocking to see that one in five Brits have thought about selling their car because running costs are just too high, and younger drivers, who are typically burdened with higher insurance rates already, seem to be struggling more than most with this tough decision.”

Changes to debt relief orders

Currently, people applying for a debt relief order (DRO) can’t own a car worth more than £2,000. But from the 28 June, this is increasing to £4,000.

A DRO freezes your debts for 12 months and prevents creditors from chasing you to pay. If your money situation doesn’t improve during this time, your debts are written off.

It’s important to keep in mind that DROs will affect your credit rating for six years. And if your situation improves during the 12-month period, you may need to repay your debts.

As well as the change to the value of the car you’re allowed to own, the amount of debt you can have to be eligible for a DRO is going up from £30,000 to £50,000. This change will also come into effect on 28 June.

Am I eligible for a DRO?

 You may be eligible for a DRO if:

• you don’t own your home
• you don’t have any belongings of much value
• you have very little money left at the end of the month

Do you need money advice?

If you’re struggling to keep your head above water, you might benefit from some advice.

We give free and impartial advice around budgeting, grant applications and benefits entitlement, and can recommend ways to tackle debt. All of our advice is free. If you go on to take out a debt solution, some of these are also free and some come with a fee.

Find out more on our website, or give us a ring. We’re here to help.