If you’re looking to buy your first car, or upgrade to a newer model, you need to look at more than just the price on the windscreen. You need to think about a car's ongoing costs before you buy.

Give me the main points

  • Cheaper up-front might cost more in the long run.
  • A pre-purchase vehicle inspection is money well-spent.
  • A history report will give you peace of mind.
  • Remember to factor in stamp duty.
  • Signing up to roadside assistance is smart.
  • Shop around for the best insurance deal.

What are your upfront costs?

Purchase price

The car you buy will be determined by what you want, what you need—but most of all, what you can afford. But here you need to consider a car's costs over its expected lifetime. While a new car can be more expensive to buy, it should be cheaper to service. Conversely, a used car will likely be cheaper up-front, but will probably need more maintenance.

Vehicle inspection

Before you buy a used car, get a professional to inspect it (even if you know a bit about cars). It could be your local mechanic: it could be a pre-purchase vehicle inspection through your State or Territory’s motoring club (eg. the RACV or the RACQ).

Car history reports and financial searches

For a small fee, a Personal Property Securities Registry (PPSR) search will tell you if the previous vehicle owner still owes money on the car. This is important because if they do—and they default on a secured loan—'your' car could be repossessed, even after you've bought it.

For a larger fee, you'll get a car history report. This gives you not only the car's financial history, but other important details (including an approximate valuation of the car, its odometer readings; its write-off history and if it's been stolen).

Stamp duty

Stamp duty can be a large one-off cost and is calculated on the price of the car you’re buying. Be mindful that each state has different stamp duty costs depending on what type of vehicle you’re purchasing (eg. small car, ute, hybrid). Also note if you’re buying a new car, some dealers may add stamp duty on top of the purchase price.

What are your annual costs?

Roadside assistance

Roadside assistance is a service that the motor vehicle club in your State or Territory offers its members. While you’ll need to pay an annual membership fee you're covered in the event of a break-down. You'll also get discounts on accommodation, theme park tickets, car hire etc.

Registration

A large ongoing cost you need to budget for each year. When you first buy your car, you'll also need to factor in registration transfer (and registration renewal if it’s about to expire). Registration fees vary from state-to-territory-to-state, but your local vehicle registration centre will be able to tell you what you're due.

Insurance

Something you hope you’ll never use, but something you'll never want to be without. While third party insurance is compulsory for all car owners, it's advisable to take out insurance that covers fire, theft and accidents. Your insurer may offer a discount if you have all your insurances (eg. house and contents) with them. It’s worth asking.

What are your ongoing costs?

As we’ve already discussed, when you buy a car you’ll need to budget for many annual costs including insurance, registration and roadside assistance.

Here are other ongoing costs you'll need to consider:

  • petrol
  • road tolls
  • servicing and maintenance
  • new tyres
  • parts and repairs
  • loan repayments (if applicable).

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