The costs of owning a car

For many of us, a car can be essential. Whether you’re driving it to work or just taking it out to escape on weekends, a car can mean freedom.

However, cars can be expensive not just to buy, but also to run. Before you buy a car, it’s important to ensure you’re aware of all the costs that will come with your new wheels.

The cost of running a car can be broken into two different categories, upfront costs and ongoing costs. It is important to understand that these costs can vary based on a number of different factors, such as:

• Where you live, whether it’s a regional area or an urban area;
• What kind of car you drive including its:
• Age, make and model
• Size and shape; and
• Engine type and capacity
• The type of driving you do and the distance you regularly travel
• The age and experience of the drivers using the car; and
• What your car is used for

Upfront costs

Stamp duty

Stamp duty is the percentage of the purchase price of any new or used vehicle that must be paid to the relevant state or territory government. Stamp duty varies according to the state you live in – check out the links below for more details and to calculate costs:

• Australian Capital Territory
• New South Wales
• Queensland
• South Australia
• Tasmania
• Victoria
• Western Australia

Compulsory Third Party Insurance (CTP) and Registration 

Another cost to factor in is paying for your car’s registration and CTP. The registration you pay helps to fund road and road related infrastructure, your CTP is required by law to cover anyone who may be injured due to the fault of your car’s driver.

Car Insurance

Car insurance policies, such as Comprehensive or Third Party Property, are optional insurance cover types. They offer cover in the event that your vehicle is damaged, or causes damage to someone else’s property. Purchasing this insurance may end up saving you a lot of money in the long run if you have an accident. See these car insurance options.

Buying a new car – Fees and charges

If you’re buying a new car, you may have seen or heard about some costs on top of the sale price. Ask the dealer for the total ‘drive away’ or ‘on-road’ price of the car so that you’re not caught off-guard with unexpected fees and charges for things such as number plates, registration or dealer delivery.

Ongoing costs

There will be many ongoing costs such as, tyres, car detailing, road tolls and maintenance. However, fuel and car servicing will likely be your biggest ongoing costs.

Fuel

Buying a car with economic fuel consumption can save you a lot over time. Fuel economy typically relates to the vehicle and engine size, a small sedan with a smaller engine size will generally offer better fuel economy than a large sedan with a high powered engine.

Car servicing

Experts recommend servicing your car every 12 months or every 15,000km, whichever comes first. This helps to ensure that your car is maintained and operating at its best; however, it can be expensive. A benefit of buying a brand new car is capped price service options offered by car dealerships, this means no surprises when it comes to servicing your car and helps you to budget for  the future.  

Tackling the price

Saving a bit more money on top of the cost of the car you’re wanting to buy will give you a buffer so that you can afford ongoing costs like fuel and servicing. Check out our tips on how to create and stick to a budget.

If you need the car now and don’t have time to save, a personal loan can help you make the purchase straight away. With CommBank you have a range of personal loans options: a Fixed Rate Personal Loan, a Variable Rate Personal Loan or a Secured Personal Loan.

A Secured Personal Loan lets you borrow at a lower rate than an unsecured loan by using your new car as security, reducing the amount of interest you have to pay over the course of the loan. Find out more about the difference between each loan.

A novated lease is a way you can finance a new or used car and make your repayments from your pre-tax salary with approval from your employer. It can also bundle your vehicle’s expenses into one simple payment. Novated leasing is a form of ‘salary sacrificing’, which effectively reduces your taxable income.