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
extras sold through car dealers with a car loan as it may not
be good value for money and only pays in limited
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
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. 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.
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
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
accounts, so you won't be tempted to use the money for other
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:
Saving for a goal, like a car, takes focus. Check out our tips
on ways to avoid being tempted into impuse buying.
- gym membership
- restaurant meals
Visit our webpage for ideas on simple ways to save
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
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.
Last updated: 23 Aug 2018