The real cost of buying a car
- Posted Getting Started
While purchasing a vehicle can be exciting, the initial cost of a vehicle is only one of many financial factors to consider.
Depending on where you live in Australia, the average cost of running a car can range from just over $14,000 to over $21,000 annually.
Knowing what you're in for before you step into the dealership can help you align your goals with what you can afford at the end of the day. To help you better prepare for that big auto purchase, here’s a look at the other costs that will affect the total price you end up paying for the 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 vastly. Generally stamp duty is based on the market value of the vehicle or the amount of money you paid, whichever is greater. Be sure to check with your local vehicle registry office on the correct rates you have to pay.
Transfer fees and registration
Upon purchase of a vehicle, you’ll need to transfer the ownership (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.
The annual renewal of your registration is dependent upon many factors including the weight of your car and whether or not you’re using it for personal or business purposes.
You will also need to purchase Compulsory Third-Party (CTP) insurance. CTP is mandatory in all Australian states and territories. It provides compensation for personal injuries caused by motor vehicles, but 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.
In order to drive your car you may wish to consider your insurance needs. While CTP insurance is mandatory, there are also other insurance policies that can offer you different coverage, and depending on the type of car you buy, your age and driving history, this could be a major financial element to think about.
Pepper 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, be sure to thoroughly read through the Product Disclosure Statement (PDS) that comes with your policy. Your policy documents will advise when your policy is about to expire so you can renew it accordingly each time.
Servicing your vehicle
From time to time, you’ll need to service your car to ensure that it stays in a safe and roadworthy state. While you may service your car as often as it is indicated in the owner’s manual at first, your car might also require more regular servicing as it gets older or has clocked a high mileage.
Depending on how old your car is and the service centre you’re taking it to, the amount of service it requires each time could differ. Cost wise, you’d be looking at 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 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:
- Replacement parts
- Road tolls and parking
- Roadside assistance, if not already offered by your insurer
- Loan repayments, if you’ve got a car loan
Before buying a car, or taking 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 that you’re managing your finances more efficiently and responsibly, and that buying a car isn’t a burden on you at the end of the day.
For more information on financing a vehicle that suits your needs, contact a Pepper Money Lending Specialist to discuss your car loans options on 13 73 77, or speak to an accredited Pepper Money Broker.