Posted 21 months ago
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Looking to buy a car? Owning a car can give you the independence and freedom to easily go anywhere, anytime without having to consider public transport. However, when it comes to the cost, there’s actually more than meets the eye. Unlike buying electronics or other products, the actual price of a car will be a lot more than the figure that it’s being advertised for. It’s not uncommon for people to overlook the hidden cost of buying a car, especially if you’ve never had one before or haven’t owned one in a while. Here, discover the hidden cost of buying and running a car, so you can make an informed decision when it comes to purchasing one.
The registration fee
In order for a car to be legally driven in Australia, it must be registered. Registration is an ongoing cost, one that you’ll have to pay every year. The cost will vary depending on the car’s value and sometimes your postcode. When buying a second-hand registered car, the rego will already be paid, however, it will have to be renewed at some point. Make sure you enquire how many months left it has; it might expire soon after you purchase it, and you’ll have to come up with more money right away.
In addition to the registration fees, you should consider the cost of insuring your vehicle in case of an accident. Some insurances are optional, but some aren’t.
Compulsory Third Party (CTP) insurance must be purchased by law, as it covers personal injuries you may cause to yourself or to other people if you’re involved in a car accident. In Victoria, Tasmania, South Australia and Western Australia, CTP insurance is included in your vehicle registration. In Queensland and New South Wales you must purchase CTP insurance separately from your registration. Generally speaking, for CTP we’re talking about anything over $600 per year.
You can also purchase “third party” insurance – which can cover you for damage to other people’s vehicles or property in the event of an accident; or you can buy “comprehensive” car insurance, which can also cover damage to your own vehicle.
The actual cost of insurance for your car will be tied to the car’s make, model and year, as well as your age, driving record, sex and where the car will be kept overnight, amongst other factors. Comprehensive cover can be over $1,000 per year, so doing your research on car insurance that meets your needs is very important.
If you’re on a healthcare card or have a household income of less than $48,000 (excluding superannuation), you may be eligible for Essentials by AAI designed by not-for-profit, Good Shepherd Microfinance, in partnership with one of Australia’s leading insurance companies, Suncorp. Essentials by AAI offers a choice of fortnightly, monthly or annual payments, the option of paying via Centrepay and no hidden late fees. Essentials by AAI is comprehensive insurance designed for second-hand cars of up to $3,000 or $5,000. More information on Essentials by AAI.
Maintaining the car
Cars are machines, and machines need to be checked regularly in order for them to run properly and to avoid perfectly preventable accidents. Generally speaking, your car should be serviced at least once a year including; oil changes, tune-ups, brake checks, exhaust fans and other elements. In addition to the minimum upkeep, from time to time you’ll have to repair car parts or features, such as the air-con, fuel pump, engine, transmission, light beams and heating.
Filling the car with petrol
It may sound obvious - but cars need petrol to run. This is an ongoing cost you'll be faced with when you buy a car. How much you spend on petrol will depend on how much you drive it, but also on the car's make and model. Generally, the bigger the car, the more petrol it will go through. On average, a hatchback petrol tank can currently cost around $50 to be filled.
The cost variation depending on the type of car
It's important to be aware how the make, model and year of the car can affect the ongoing and hidden costs. Newer or bigger cars from pricier brands mean more expensive registration, insurance, petrol costs, tyres, servicing and maintenance. In contrast, safer and secure cars may have lower costs regarding theft insurance, as they are less likely to be robbed.
Professional vehicle inspections
While not compulsory, paying a qualified mechanic to carry a professional inspection of the car you're interested in can go a long way in avoiding headaches down the track, especially when you purchase a second-hand car. Truth is, you never know what the car has been through or if it was properly looked after by the previous owners. Keep an eye on the odometer as well, as sometimes they can be tampered with.
Depreciation of the car
For the money they're worth, cars decrease in value very quickly. The older the car, the faster it will decrease in value. It can also depend on certain makes and models. Keep this in mind when purchasing a car and how convenient it will be for you if you'd like to re-sell in the future.
Considering the real cost of purchasing a car
Owning your own car can give you great freedom to do what you want, when you want. But don’t forget that buying and owning a car has hidden costs that go beyond the purchase price! Take some time to understand the cost of insurance, registration, maintenance, servicing and even petrol. That way, you can get a clearer and more realistic picture of what you can maintain and which car is the most convenient for you and your family.
If you need cash to pay for the costs of maintaining your car, check out a Speckle loan. We understand that keeping your car on the road is important. Car expenses are one of the top reasons why people need a cash loan. Speckle is a cash loan of between $200-$2,000. Speckle loans are run by a community organisation so they’re often half the cost of a commercial lender.