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
||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
|Third party property
|Third party property, fire and theft
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
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
- 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
- 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.
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
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
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.
One of the major hidden costs of owning a car are the mechanical
costs of running it:
- Maintenance - oil changes, tune-ups, tyres,
- 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.
Last updated: 25 Sep 2017