The True Costs of Owning a Car


A common expense that puts strain on family budgets is that of car ownership. Often times many people neglect to think about the additional costs to a vehicle beyond loan repayments and insurance. Low Income Loans Australia has provide the below information and tips on the true costs of owning a vehicle.

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Plan for these upfront costs in addition to the car price

Most of us think about the price tag on the windshield. In addition to that price you need to take these costs into account:

  • Vehicle Inspection: Pay a professional to check the car over. The inspection will cost about $200 or more. That may seem like a high price, but it costs less than buying a bad car and being stuck with it.
  • Get a PPSR:  For a small fee you can get a Personal Property Securities Registry report to establish a person selling the car actually owns it and that the car is free of financial encumbrances.

This is important: If the seller defaults on their car loan the car can be repossessed from you even after you take possession of the car.

  • Get a car history report: For a slightly higher fee you can get the car’s complete history:
    • Valuation
    • Odometer reading
    • Write-off history
    • Stolen car information
  • Stamp Duty: This legal requirement is calculated based on the price of the car. If you are buying from a dealership the stamp duty may be tacked onto the cost of the car, so ask about that.

The monthly annual cost of car ownership

Before you buy a car, you need to think about the real costs of owning a car. Plan for monthly and yearly costs so you can enjoy your car for a good, long time:

  • Roadside Assistance membership fees: You may think of this as a perk, but it is really valuable. The initial membership fee and annual fees with clubs like RACV or NRMA provide you with some of the following benefits:
    • Discount travel accommodations
    • Reduced price for inspections
    • Deals for tows and roadside repairs
  • Vehicle Registration: You will need to budget for this annual cost.
  • Insurance: You are required by law to have at least Third Party Insurance. Consider getting more insurance that covers fire, theft, and accidents. You may be able to find a great deal with an agency that will cover both your home and car to reduce your costs.

Before you Buy a Car set up your Daily and Monthly Costs

Plan how you will afford to actually use your car to go to work or school every day. These daily and monthly costs can add up. Create your budget and strive to stick to it:

  • Petrol: Monitor your costs the first week, and then average the cost for fuel that first week over the month.
  • Road tolls: If you use the toll roads frequently, this should be in your budget as a fixed cost.
  • Servicing and Maintenance: After your first Oil changes, brakes repairs, and other maintenance are done keep the receipts and budget those costs.
  • Tyres: Tyres require rotation, balancing, and alignment. These tasks will lengthen the life of your tyres and reduce the need to buy new ones often.
  • Monthly car payments: Use the repayment book your dealer provides to ensure no payment is ever missed and use the stubs to record your history for your own benefit.

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