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
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. 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.
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 be 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.
Work out how long it will take to meet your savings
Savings goals calculator
Our free and easy-to-use app will help you to visualise your
savings goals and track them on your smart phone.
Set, plan, track and manage your savings
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.
Last updated: 18 Apr 2017