We're a nation of car users ? although not always by choice. Expensive and unreliable public transport systems have forced many of us onto the roads, but having a car certainly isn't a cheap alternative. The cost of owning a car, even if you don't use it much, is very expensive. There's vehicle licence duty, insurance, MOT and the depreciation in value, all of which add up. Combined with the costs of actually driving the car, from petrol and oil to tyres and servicing, it can really burn a hole in your pocket. However, there are ways in which you can keep costs to a minimum.

To keep or use your vehicle on any public road, you must pay vehicle licence duty (also known as road tax, car tax or vehicle excise duty) and display a tax disc on your car windscreen to show that you have paid the duty. Tax discs aren't transferable so you can't change them from one car to another ? you'll need one for each car. The cost of the vehicle licence duty is graded depending on the size, purpose, engine capacity, fuel type and CO2 emissions. So the more fuel-efficient and environmentally-friendly your car is, the less you'll pay to tax it. Small petrol/electric hybrid cars such as the Honda Insight pay no duty, while the average small car will cost around ?100 and the biggest gas guzzler up to ?210.

Car insurance is another legal requirement. You must have at least third party cover to cover the costs of repairing other vehicles should you have an accident in which you are deemed to be at fault.

Policies normally run for a period of one year, although some providers accept payments in monthly instalments rather than one annual fee. Premiums are higher than ever now, but despite this people can be lazy about arranging their insurance, just renewing with the same insurer when the renewal quote comes through. It pays to shop around, though, as insurance companies don't tend to reward their long-term customers. Instead, most providers offer attractive deals to new customers, so it's worth getting lots of quotes. Most major insurers now have online quotation forms, so it's quick and easy to get a price. Remember to examine the exact terms and conditions of each policy, though. Some quotes that seem cheap may not include facilities that others do, such as legal assistance and courtesy car provision should your car need repaired. Also check the excess amount that you'll need to pay in the event of a claim ? cheaper policies tend to have larger excesses.

Insurance companies calculate premiums based on the perceived degree of risk of the person insured and likelihood of a claim ? young, male drivers who have only recently passed their test are regarded the highest risk. New drivers can help to reduce their premiums by taking the Pass Plus course offered by the British School of Motoring. It provides six hours of advanced training, including motorway skills and you'll get a certificate for completing it, which is recognised by many insurance companies. The course costs ?100, but the savings on premiums can be two or three times this.

The heightened threat of terrorism, increasing demand for fuel from emerging economies such as China, and high rates of fuel duty levied by the government, have seen UK petrol prices rocket phenomenally over recent years. However, until viable alternative fuels become a reality, we'll have to pay the prices at the pump. Think about how you could cut down on the fuel you use, though. For a start, a smaller car will give you more miles per gallon. Try to share journeys with other people, or just walk or cycle if it's not that far. Have your vehicle serviced and the tyre pressure checked regularly ? keeping your car running to the best of its ability will reduce fuel consumption. Don't carry unnecessary weight in your car when you don't need to. For example, remove roof racks when not in use.

To keep your car safe and legal on the roads, you'll need to obtain an MOT certificate every year if your car is three or more years old. This test ensures that your car meets the minimum government environmental and road safety standards. It currently costs ?44 for private domestic vehicles, but if you need any repairs or adjustments made to your car to pass the test, it will of course cost you more. It's wise to have a regular service as well as MOT to keep your car running effectively. Recommended service intervals are always given by the car manufacturer. Service costs between garages can vary considerably, particularly between franchised dealers and independent garages, with franchised dealers inevitably the most expensive. Watch out for labour costs in particular, which can range from ?25 to ?115 per hour. Following action by the Office of Fair Trading in 2004, vehicles under warranty are no longer required to be serviced at a franchised dealer of the manufacturer, so even if your car is new you can have it serviced at a cheaper independent garage.

Purchasing a vehicle is never an investment. As soon as you drive a new car off the forecourt its value starts to plummet. Depreciation is one of the hidden costs of running a car, but it is a very significant one. Value decreases quickly as a car ages, and it costs a lot to maintain, so you'll never make your money back on it when you sell it. Buying a second-hand car is a much cheaper option in terms of depreciation.

On top of all of these costs, motorists are bombarded with car parking charges and road tolls. It's just about impossible to find free parking in large towns and cities these days ? and some cities charge a congestion fee just for driving in the centre of town. Many key bridges are toll-paying and the UK now has its first toll motorway, a spur of the M6. Remember, if it's all too expensive, there's always the bus or train!