Saving up and buying a new car can be incredibly exciting. However, oftentimes savers will miss out on the actual cost of the car by a significant amount of money. The price of car insurance, financing, maintenance, repairs, and gas can double the overall cost of your new vehicle. To ensure you have enough money to afford your new car, be sure to budget for the following.
Total New Vehicle Cost
Before you can even look at the cheapest car insurance rates available for your new vehicle, you need to consider its total price. It’s easy to forget that the price of a car goes beyond what’s seen on the sticker. There are other expenses to consider in addition to selling price and taxes:
- Roadworthy Price: The cost to make a vehicle roadworthy depends on where you live. It can be as low as $40 (NSW) or as high as $195 (TAS).
- Price to Transfer Rego: A vehicle’s Rego must be transferred to the new driver if a rego is currently on the car. This price ranges from $17 (NT, WA) to $40 (VIC).
- Rego Price: Most cars will already have a Rego document, which identifies your vehicle. You must Rego your vehicle in Australia, and it must be in the name of the person driving the car. In general, it’s best to buy a vehicle with a current Rego, but if it doesn’t have a Rego or it’s about to expire, you can purchase one in the duration of 3, 6, or 12 months, depending on your state. Typically, this cost is included with your insurance. A Rego plus compulsory insurance can be quite low at $21 per 100 kg + 410 (WA) or incredibly expensive at $800-$2,000 depending on vehicle weight (NSW).
Most of these costs are a one-time expenditure, but owning a car comes with many costs that are issued more than once to the owner. Running costs may add up depending on the vehicle.
New Vehicle Running Cost
Some vehicles are cheaper to run but cost more upfront. The reverse can be true as well. In the end, it’s more cost-effective to own a car that’s cheaper to run, especially if you plan to drive it for a while. If you’re a new car owner and driver, be sure to keep track of the following costs:
- Maintenance: All cars require scheduled maintenance. Knowing how to replace the battery, tires, spark plugs, belts, windshield wipers, air filters, engine oil, and other fluids can save you a lot of money. However, you’ll still need to pay for the cost of the items.
- Repair: Eventually, your car will break down and need to be repaired. Your oxygen sensor, catalytic converter, and ignition coil will likely need to be serviced at some point. Just like with maintenance, some cars are cheaper to repair, like Toyotas or Hondas.
- Gas: Sports cars and trucks have the worst gas mileage, so expect to pay more every time you use your vehicle. However, Kia’s, Mitsubishi’s, Honda’s, and Toyota’s offer the best gas mileage across the board. To save big-time, stick to Asian manufactured cars.
- Warranty: A car warranty may be a concurrent cost depending on where you buy it. Most cars are covered by a factory warranty, but used cars often won’t be. If you want to get any additional warranties, you’ll need to pay out-of-pocket from an insurer.
- Insurance: Although we already covered this in the Rego price, it isn’t a one-time purchase. You’ll need to buy car insurance each year, which rises and falls based on your age, time driving, location, the car you own, and multiple other factors.
After considering all the above costs from owning a vehicle, you can finally move on to the loan.
New Car Loan Costs
The car loan isn’t the only thing to consider before the salesman hands over the keys. If you put forth a hefty down payment and have great credit, you can significantly lower the monthly cost of your loan and what you’ll eventually pay in interest. Many dealerships will let you trade-in your old vehicle to lower the price of your car, which will also reduce the cost of your loan.
Most financial experts agree that the amount of money you spend on debts should not be more than 36% of your gross income, so consider this number while searching for a loan. Remember that debt can be expensive. It’s in your best interest to take on as little of it as possible.