Ongoing car costs

You've worked out how much you can spend and have found the car you want. There are ongoing costs associated with buying a car. Here's what it costs to keep your car on the road.


To drive a car on public roads it must be always registered. The cost of registering a motor vehicle for the first time will depend on your car's market value and your postcode.Your car's registration must be paid every year.

Calculate your registration fee using the fee calculator for registration and licensing for your state or territory.


Insurance covers the cost of replacing things if something goes wrong. Different types of car insurance cover different things. At a minimum you will need to have compulsory third party insurance.

This table explains the difference between third party, third party property, fire and theft, and comprehensive insurance.

Types of insurance

Type Damage to your car Damage to other people's property (other cars) Damage or loss caused by theft of your car Injuries or death to other people in an accident
Compulsory third party no no no yes
Third party property no yes no no
Third party property, fire and theft no yes yes no
Comprehensive yes yes yes no

Cost of insurance

The cost of car insurance depends on many factors:

  • Your age
  • Driving record
  • Make and model of vehicle
  • Annual distance travelled
  • Whether you are male or female
  • Where the vehicle is kept overnight
  • Your address
  • Whether your vehicle is owned completely or whether you still owe money on the car loan

Here are some factors that can increase and decrease your car insurance costs:

Smart tip

Get a few quotes for insurance for the car you want to buy to see if it is more expensive to insure than another type of car.

  • Cost of the car - Cheaper cars tend to be cheaper to insure because you are insured for the value of your vehicle.
  • Security features - Immobilisers, alarms and 24 hour tracking devices reduce the risk of theft and therefore the cost of your insurance.
  • Repair costs - Insurers also consider the general cost of repairs, so if parts of your car are rare or expensive to locate you will be expected to pay more for insurance.
  • Performance enhanced and modified cars - These are generally more expensive to insure because of the increased risk of theft and speeding.
  • Modifications - Any modifications you make need to be reported to your insurer so that they will come under your policy otherwise your coverage and liability may be seriously affected when you try to make an insurance claim.

Video: The cost of car insurance

The cost of car insurance video

Nicki's sister didn't consider all of the costs when buying her first car and came to regret her decision. See how working out your budget can help you know what you can afford.

No claim bonus

No claim bonus schemes are meant to reward safe drivers or those who don't claim on their insurance but a no claim bonus does not always reduce the cost of your premium. Don't just stick with your current insurer for a no claim bonus, as you could get a better deal elsewhere. Find out more about what a no claim bonus really gives you.

Paying excess

A car insurance claim may still cost you money if you have excess to pay. The excess is an amount of money you pay towards a claim you make on your car insurance policy.

Most insurers will allow you to increase your excess to reduce your insurance premium. It is one of the most effective ways to reduce your car insurance costs - but it also means that when you do make a claim, you will have to pay more towards it. You don't want to be left out of pocket when something does go wrong. Choose a level of excess you can afford.

Car insurance for people on low incomes

If you are on a low income or your car is not worth much, it's still worth insuring if you don't have the money to replace it. Good Shepherd Microfinance has worked with insurance companies to create affordable and simple insurance policies for cars worth up to $5,000. These policies have flexible payments options and premiums can even be deducted from some Centrelink benefits. Find out more about the Good Insurance program on the Good Shepherd Microfinance website.

Motor vehicle accident problem solver

The Financial Rights Legal Centre's Motor vehicle accident problem solver is a tool that helps you to navigate your car insurance if you have an accident.

Maintenance costs

One of the major hidden costs of owning a car are the mechanical costs of running it:

  • Maintenance - oil changes, tune-ups, tyres, brakes, exhaust
  • Repairs - heating, air conditioning, cooling system, engine, transmission


All cars depreciate over time which means they decrease in value, due to wear and tear. While this isn't a direct out of pocket cost it is an important factor to consider as some cars depreciate faster than others.

Before deciding what car is right for you, think about what the car will be worth down the road when it comes time to sell. These websites show depreciation rates for different types of cars:

Buy a car you can afford to run and maintain and be certain that you factor these costs into your budget.

Related links

Last updated: 03 Apr 2018