1. Initial purchase cost of the vehicle
Buying a car is the biggest purchase many buyers will encounter, aside from buying a house. For most of us, buying a car comes before buying a house. The initial purchase price of your car is a significant chunk of your ongoing costs.
You may look at your income and expenses and see a healthy-looking dollar figure to purchase your new car. Keep in mind though, that the initial purchase price is only the beginning.
2. Car loan repayment costs (where applicable)
If you are approved for a car loan, the purchase price will be broken down into regular repayments, with interest added. Over the lifetime of your loan, you will end up paying more than the initial price tag.
The average car payment in Australia is approximately $188 per week. This amounts to nearly $10,000 per year. This information comes from the Transport Affordability Index by the Australian Automobile Association.
Interest rates are constantly changing. Currently, most car loan interest rates sit between 5–10%.
A broker can help you find the best loan for your individual needs. Unlike a bank, brokers access multiple lenders to compare rates and other features. Use our online calculators to estimate your repayments.
Obviously, the more deposit you put down on the loan, the less your repayments will be. If you are in a position to purchase your vehicle outright you can avoid a car loan (and loan interest) altogether. Not many people are in a position to buy a car outright. If you need a car loan, you should also account for the other ongoing costs listed below.
3. Car insurance
Car insurance is a legal requirement in Australia. The cost of insurance depends on a myriad of factors, including:
- Vehicle details, such as the type, model and year
- Registration and insurance status
- Transmission type, whether the car is automatic or manual
- Accessories and modifications
- Finance status of the vehicle
- Vehicle use, business or personal
- Vehicle location and storage method
- Damage status
- Driver’s age and gender
- How long the driver has had their licence
4. Licence and registration costs
Before you drive your car on public roads, you must register your vehicle and get your driver's licence. You need to renew your vehicle registration every year and your driver's license every few years. Both your registration and licence will be specific to vehicle type.
Costs for car registration and driver’s licences vary around Australia, so check out your state or territory’s Department of Transport for current, local costs.
All car owners in Australia require Compulsory third Party (CTP) insurance. In fact, you will need CTP insurance before you can legally register and drive the car. If you buy a second-hand car, the CTP insurance will transfer with the registration of the vehicle.
5. Fuel or electric charging costs
Fuel is a major expense, and it can vary depending on the type of car you own and how much you drive. Smaller, fuel-efficient vehicles tend to be cheaper to run, while larger cars or those with performance engines can guzzle more fuel.
For the September quarter 2023, average weekly fuel costs were $100.29 for capital cities and $103.46 for regional areas. This totals over $5,000 spent each year on fuel alone.
Meanwhile, electric cars require zero fuel costs, yet require regular charging. Public charging stations charge a fee, albeit small compared to fuel costs.
6. Servicing and maintenance
As a general rule, you should get your car serviced with a mechanic every six months or 10,000km – whichever comes first. Through regular servicing, you can extend the life of your car and reduce chance of expensive issues down the line. It also keeps your vehicle safe to drive.
A standard service checks the condition of your car, identifying any wear and tear, fluids, brakes and more. Your car’s service will depend on the make, model and history of your vehicle.
The cost of servicing and maintaining your car depends on the make, model, age of the vehicle and how you use it. Average costs vary significantly around Australia. Overall though, average spend on servicing and tyres was around $1,850 per year, or $35.54 per week.
