Buying a car is one of the first major financial decisions you make in your life. Unfortunately, it can also be one of the first financial traps that you fall into, either by getting stuck with a lemon or paying more than they should on an overpriced deal.
We’re going to look at the actual costs of buying a car in Australia, so you can get the car you want, at the price you can afford.
This includes everything you might need to pay for when you’re actually buying the vehicle. There are unique costs that come with buying directly from a dealership or through private sale, so make sure you account for the costs.
The purchase price of your car will be the most significant expense, but it also influences other costs, such as your stamp duty, luxury car tax, and your mid-to-long-term costs in operating the vehicle.
If you’re looking for longevity, a newer car may be more expensive, but it’s likely to be cheaper to service, have greater fuel efficiency, and be safer.
A little sneaky, but if you’re buying from a dealership, there can be a fee included to deliver the car from the manufacturer to you. Most dealership related costs like this will be in the fine print of your agreement, and can be negotiated if you have the confidence.
Stamp duty is a one-off cost that is paid when transferring the car. It can be a significant sum, and each state in Australia has a different way of calculating it and applying it to certain purchases.
You can calculate your stamp duty here.
If the vehicle you’re purchasing exceeds the Luxury Car Tax (LCT) Threshold set by the ATO, the purchase will often include an additional expense - this will be paid by the dealership, but you may be able to claim it back in some instances.
If you’re buying through private sale, then you’ll need to add on some small costs to make sure you aren’t losing out big time once the deal is done.
You’ll need to do two things:
The mechanic is a no-brainer, and you should always be getting an expert to check the car with an impartial eye to make sure you aren’t getting sold a dodgy old wreck, or even just one that will require thousands in repairs in only a few months.
The CarHistory report, however, is your insight into the car’s personal history. It’s just under $40, but it will tell you everything you need to know, from previous sales and listings, odometer readings, an estimated value of the car, and also if it’s currently under finance.
Learn more about buying a car through a private sale.
Now you’ve got the car, this is how much it’s going to cost to keep it on the road Some of these are fixed (like annual registration or insurance) and some of them will be variable (fuel, servicing, and toll charges).
Registration fees are what you’ll need to pay each year to make sure you can legally drive your car on the road. These fees can vary, so contact your local vehicle registration authority for information on how much you’ll need to pay and by what date.
Insurance is never a terrible idea when you’re getting a car, but make sure you’re getting a good deal. If you’re buying through a dealership, they might try to include insurance and other costs in the sale price due to the convenience. Don’t be lured in, and make sure you check if you can get a cheaper deal on your existing insurance package first.
Gets you out of a jam and great if you’re travelling rurally or in areas where there’s an increased likelihood of a breakdown. Again, if you’re buying through a dealership, just make sure that you’re not paying (even slightly) increased prices for these packaged deals.
Most people will be able to budget easily for all the ongoing fixed costs, but your variable costs are where you might need to consider a little financial wiggle-room down the line.
Variable costs can include:
We’ll compare the best loans we can find from our available pool of lenders, personalised entirely based on a few simple questions, and you can see exactly how much you’ll pay with each lender.
This includes all the little details like fees and restrictions, so you can find the offer that suits you best, for the car you want.
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
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