Research by the price comparison site found that young motorists typically pay a total of £2,524 to drive a car for a year in 2025, compared to £3,202 in 2024.
The decline in the cost of driving is mainly due to a drop in the average car insurance premium, which decreased to £1,437 in March 2025, compared to £2,077 in the same month last year.
Compare the Market said the average premium in March 2024 (£2,077) was the peak in the cost of car insurance for young drivers, with premiums generally declining since then. The decline in motor premiums may in part be due to a stabilisation in the cost of claims for insurers.
As well as falling insurance costs, the decline in overall car running costs has also been driven by a year-on-year drop in the cost of fuel due to lower global oil prices. Car insurance now represents 57% of the total car running costs for young drivers, compared to 65% last year.
Guy Anker, insurance expert at Compare the Market, said: “Young drivers will be pleased that the cost of driving, including car insurance, has fallen significantly.
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“Despite this, it is still a good idea for all motorists to compare insurance prices online first before renewing. Through proactively shopping around, young drivers could save by switching or finding a deal that is more suitable for their circumstances, such as a telematics or pay-by-mile policy.”
