While buying a car can be exciting, the initial cost of the vehicle itself is only one of the many financial factors you might want to consider.
According to Transport Affordability Index by the Australian Automobile Association (AAA), the average cost of running a car in Australia can range from $14,000 to over $22,000 annually. Ranking amongst the highest in the country is Sydney, with a yearly cost of around $22,292 in comparison to Hobart which is sitting at around $15,000 per year.
Knowing what you're in for before you step into the dealership can help you set your goals with what you know you can afford at the end of the day. To help you be prepared, here’s a look at the costs that will affect the total price you end up paying for that car you want.
Stamp duty is a one-off payment when transferring ownership of a vehicle and is payable whether you’re buying a new or used car, from a dealership or a private seller.
Depending on where you live in Australia, the stamp duty you pay can differ a lot. Generally stamp duty is based on the market value of the vehicle or the amount of money you paid, whichever is greater. So make sure you check with your local vehicle registry office on the correct rates you will have to pay.
Transfer fees and registration
When you buy a car, you’ll need to transfer the ownership (that means register the vehicle) under your name. Again, transfer fees, and the time limit you’re given to complete the transfer can differ depending on where you live in Australia.
You will also need to pay for your car registration every year. The annual cost of renewal of your registration will depend on things like the weight of your car and whether or not you're using if for personal or business purposes.
You will also need to buy Compulsory Third-Party (CTP) insurance. CTP is absolutely mandatory in all Australian states and territories. It provides compensation for personal injuries caused by motor vehicles, but be aware that it doesn’t insure the vehicle itself against damages.
In NSW you’ll need a Green Slip, you may also need a pink or blue slip (a document verifying that your vehicle has been through an inspection) to re-register your vehicle.
According to Transport Affordability Index by the Australian Automobile Association (AAA), the average cost of running a car in Australia can range from $14,000 to over $22,000 annually. Ranking amongst the highest in the country is Sydney, with a yearly cost of around $21,791 in comparison to Hobart which is sitting at around $14,100 per year.
Ideally you want insurance that covers the vehicle. While CTP insurance is mandatory, there are other insurance policies that can offer you that coverage, and depending on the type of car you buy, your age and driving history, this could be a pretty big financial element to think about.
Pepper Money is not able to provide insurance advice so you may need to discuss your relevant needs with a financial planner or insurance broker.
If you’re opting to take up additional insurance outside of the CTP, make sure you thoroughly read through the Product Disclosure Statement (PDS) that comes with your policy. Your policy documents will tell you the date that your policy will expire so you can make sure you are financially ready to renew it each time.
Servicing your vehicle
From time to time, you’ll need to service your car to ensure that it stays safe and roadworthy. The owner’s manual tells you how often a service is needed but bear in mind that your car might may need servicing a bit more often as it gets older or has run up a high mileage.
Depending on how old your car is and the service centre you’re taking it to, the amount of work it needs each time could differ. Cost wise, you’d be looking to budget for a range of over $100 for smaller cars to over a few thousand dollars for luxury vehicles, so be sure to factor that into the ongoing cost of owning your car.
Other ongoing costs
Besides paying for stamp duty, registration, insurance, and servicing, there are also some general ongoing maintenance costs you'll need to consider. These include:
- Depreciation (that means the drop in value of the car over time)
- Replacement parts
- New tyres
- Road tolls and parking
- Roadside assistance, if not already offered by your insurer
- Loan repayments, if you’ve got a car loan
Before you buy a car, or take out a loan to do so, it's important that you work out if you are also able to manage these extra costs. That way you can be sure buying a car isn’t too much of a burden on you at the end of the day. To get you started, find out how much your repayments might be using this handy calculator.
To get you started, find out your individual rate and repayments on a Pepper Money personal loan here (it won't affect your credit score). Alternatively, call us on 1300 108 794.
All applications are subject to Pepper's normal credit assessment and loan suitability criteria. Terms, conditions, fees and charges apply.
This article provides you with factual information only, and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser. Neither Pepper nor its related bodies, nor their directors, employees or agents accept any responsibility for loss or liability which may arise from accessing or reliance on any of the information contained in this article. For information about whether a Pepper loan may be suitable for you, call Pepper on 13 73 77 or speak to an accredited Pepper Money broker.