Running costs have risen by an average of �539, says the RAC

It said depreciation in value was the biggest factor, accounting for a loss of �2,420 on average in 2006 - a 22% increase on �1,987 in 2005.

Nearly all other bills paid by the driver, such as maintenance, insurance and tax have also risen, it found.

It said the average cost of running a car had risen �539 in the past year.

The rising costs come despite the price of petrol falling by nearly 4% in the last year after a period of fluctuation, the motoring group's report said.

New cars are now worth around half their purchase price just three years after the owner first picks up the keys, according to the RAC.

AVERAGE CAR COSTS Fuel: �1,112 (�1,155 in 2005) Insurance: �412 (�389) Maintenance: �300 (�271) Tax: �129 (�124) Cost of finance: �1,040 (�948)

RAC spokesman Sean Morris, who compiled the cost index, said: "The second biggest investment we make after home ownership - car buying - is getting bigger.

"For such an important decision, too few of us understand the spread of costs associated with owning and running a car.

"The index results will be unwelcome news for many, but motorists must better understand the true cost of their vehicles."

The research, which the RAC compiles annually, includes the costs of loans to buy a new car, which some motorists would not pay.