Saving for a car

Accelerate your savings

Driving your new car, especially if it's your first car, will feel much sweeter if you've bought it outright or paid off most of it. Work out how much you need to buy your car and develop a savings plan to help you get there.

How much will you need?

You probably have a car in mind and may have an idea of what it will cost. But make sure you shop around and compare prices of different makes and models. Consider buying a cheaper car if it means a smaller debt.

As well as the cost of the car you will need to pay:

  • Registration transfer fee - This is different for each state and territory and costs about $25.
  • Stamp duty - The stamp duty you pay will depend on which state or territory you live in. For a $5,000 car, stamp duty would cost around $150. For a $10,000 car, this would cost around $300.
  • Car insurance - You should purchase both compulsory third party (CTP) car insurance, which covers injuries you may cause to other people in a car accident and comprehensive car insurance, which covers damage to property and injuries to you. CTP can cost more than $600 and comprehensive insurance can cost around $1,500. The cost of your insurance will depend on the make of car, the age of the drivers and their experience. Be wary of the insurance extras sold through car dealers with a car loan as it may not be good value for money and only pays in limited circumstances.

Our MoneySmart Cars app can help you work out the real cost of buying and running a car and show you how to avoid common car buying traps and identify hidden costs.

MoneySmart Cars app

Case study: Elaine calculates the cost of her car

""Elaine is 18 and has her eye on a Barina with a price tag of $8,000. It is a secondhand car so she has to pay a registration transfer fee of $24. In addition, she has to pay stamp duty of $240 and renew the registration for $177. Her compulsory third party insurance costs $686 per year and she gets comprehensive insurance for $1873 per year, bringing the total cost of her new car to $11,000.

Car loans

Paying for your car outright will always be cheaper than buying it on finance or taking out a loan through a bank, but if you do need to take out a loan make sure you shop around. Car yard finance can sometimes is normally more expensive than getting a loan from a bank, building society, credit union, or other lending company. See car loans for more information. 

For more information see buying a car.

Get your savings into gear

Get the money coming in

If you are over 15, consider working a few hours a week to earn some money. There are lots of jobs that are perfect for teens such as babysitting or neighbourhood gardening.

Ask your parents if there are any chores that need to be done around your house. If you have a birthday or celebration coming up ask your family and friends to donate to your car savings fund, to give your savings a boost.

Save, save, save

A car may be the first big purchase you make when you are young. You may have few expenses, but not that much money coming in either. This means you need to save as much money as you can in an account where your savings will grow.

Make yourself a savings plan and give yourself a realistic timeframe to save as much as you can to put towards your car. Keep the plan somewhere safe where you can make sure your savings are on track.

Savings goals calculator


Think about opening an online savings account. They offer a high interest rate which compounds, so you can earn interest on the interest and your savings keep growing. Find out more about compound interest.

It's also harder to access money in these accounts than other transaction accounts, so you won't be tempted to use the money for other things.

Nothing is more exciting than getting behind the wheel of your own car. Put a savings plan into gear and get ready to take to the road.

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Last updated: 31 Aug 2016