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 a car cost?

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.

Become an informed car buyer.

MoneySmart Cars app

Case study: Elaine calculates the cost of her car

Young woman who has saved for a carElaine 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. She also 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 may be convenient, but it's important to shop around to make sure you get a good deal on your loan. Banks, building societies credit unions and specialist lending and leasing companies all offer car loans, so check out what's on offer so you can compare and choose the best loan for you. See car loans for more information. 

For more information see buying a car.

Get your savings into gear

Set your savings goal

Once you know how much you'll need to buy your car, you can start putting money towards your savings goal.

Work out how long it will take to meet your savings goal.

Savings goals calculator

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.

Set up a savings account

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.

Automate your savings

If you're working, consider transferring part of your pay directly into this savings account. You can ask your employer to do this for you, or you can set up a transfer yourself. Automating your savings allows you to 'set and forget', so your savings will automatically grow each time you get paid!

Cash in your spare change

Instead of putting your spare change into a vending machine or using it to buy snacks or takeaways, why not collect it at the end of every week and put it into an old jar or empty ice cream container? When it's full, take it to your bank and deposit it into your savings account. It's a quick and easy way to boost your savings - putting you on the road that little bit sooner! 

Save, save, save

Think about cutting back on such expenses as:

  • Smart tip

    Saving for a goal, like a car, takes focus. Check out our tips on ways to avoid being tempted into impuse buying

  • clothes
  • gym membership
  • restaurant meals
  • entertainment.

Visit our webpage for ideas on simple ways to save money.

Our free and easy-to-use app will help you to keep track of where your money is going, and where you can make some changes. 

Record your everyday expenses, so you have a clear picture of what you are spending your money on. 


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.

Related links

Last updated: 23 Aug 2018