The real cost of buying a car
Last updated: 8 May 2024 | Estimated read time: 3 Minutes
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 the Q4 2023 Transport Affordability Index by the Australian Automobile Association (AAA), the national average cost of running a car in Australia is estimated to be around $430 per week, per household – that’s more than $22,000 a year. Costs vary across the country, with Sydney amongst the highest, with an estimated yearly cost of nearly $28,000 in comparison to some regional areas with costs around $19,000 per year. 1
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 be prepared, here’s a look at the costs that will impact the total price you end up paying.
Stamp duty
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 to renew your registration will depend on things like the class and engine capacity of your car (electric vehicles get rego discounts in certain areas) along with your driving record.
You will also need to take out 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 be aware that it doesn’t insure the vehicle itself against damages.
Comprehensive insurance
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.
Servicing your vehicle
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, it’ll vary significantly depending on your vehicle, but the average cost per household is up to $1,850 per year1 - 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:
Petrol
Replacement parts and servicing
New tyres
Road tolls and parking
Roadside assistance
Loan repayments, if you’ve got a car loan
Looking for a new car? We're here to help
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 our car loan repayment calculator.
Source:
1Australian Automobile Association. Comparing transport category costs over time. Per household (Q4 2023): https://data.aaa.asn.au/transport-affordability/
Contributor | Andrew Gamble, Head of Sales - Asset Finance
Andrew brings more than 20 years of experience in the finance industry. His strategic vision, leadership and his customer centric approach has contributed to the significant growth of Pepper Money's Asset Finance business. Read more.
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