A Complete Overview Of Car Costs

There are a number of costs associated with owning and operating a car, and it's important that you understand the financial commitment before you start shopping for your dream set of wheels. We'll break down exactly what costs are involved in running a car so you can budget accordingly and get on the road sooner!

The car

The most expensive part of buying a car is obviously going to be the car itself. It can be a good idea to figure out what percentage of your annual income you’re willing to spend on a car. As a general rule of thumb, you shouldn’t be spending more than your annual income on a car. In fact, it is recommended that you should spend between 10% and 20% of your yearly salary on a car. If having a higher-end or more luxury car (be sure your across luxury car tax here too) is important to you, you might want to spend 30% of your income on a car. 

For most income brackets, there will be cars available at 10-30% of your salary, so by following this rule you can feel pretty confident that you’ve found a reasonably priced car. Additionally, the costs of owning a car don’t stop once you’ve bought the car itself. You’ll also need to pay ongoing costs like registration, insurance and petrol, so it’s important to budget for these too. 

Finally, it’s important to remember that the value of your car will also decrease over time due to depreciation. It could be a wiser financial decision to invest less money in a depreciating asset like your car, so you’ll have more money to invest into assets that have the ability to grow and pay dividends in the future.

One of the biggest factors that will influence the cost of your car is whether you’re buying it brand new or second hand, and there are a number of pros and cons to both.

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    New cars

    Buying a new car is obviously going to be more expensive than buying a second-hand model, but there are a number of perks that come with this higher price tag. You’ll get the benefits of a full warranty, so if any mechanical problems arise while you’re in the warranty period, you’ll be able to get the issue fixed without any personal cost. Your car will likely have the latest technology and features, and you’ll have the confidence that it’s in tip-top shape. It’s important to note, however, that your new car will depreciate much quicker than an older model would.  

    Used cars

    On average, the price of a used car is almost 50% more than a brand new one. Buying second hand might also allow you to access a wider range of features than if you’d bought a new car. All cars depreciate, but used cars depreciate at a slower rate than their newer counterparts. This is because cars tend to experience the sharpest drop in value in the first three years, meaning that if you buy a car that is older than three years, you’ll be able to save money on the purchase price in addition to retaining more of its value.

    When it comes to buying a used car, it’s important to make sure that it’s in good condition, so you don’t end up spending so much money on maintenance and repair costs that the newer car would have worked out cheaper! It’s a good idea to take the car for a test drive and get a qualified mechanic to check the car, in addition to asking questions about the history of the car.

    Car loan costs

    The cost of your car loan is dependent on a number of factors, including your credit score, how long your loan term is, your interest rate (and the lender you choose) and whether you put down an initial deposit. You can use our loan calculator to get a good idea of how much a loan might cost you. Or, if you’d like to get your personalised rates (without impacting your credit score), you can do so here

    90% of car sales in Australia are financed through car loans, so if you decide to finance your car through a loan, you’ll be making the same decision as most Aussie drivers. If you’re tossing up whether a car loan is the right move for you, have a read of our blog posts ‘6 Benefits of Buying a Car on Finance’ and ‘What is a Car Loan? What’s Involved’ for a more detailed insight into how car loans work. 

    If you apply for a loan through Driva, we’ll carefully assess your financial situation before we share any of your information with your chosen lender. This helps to avoid disappointment, protect your credit score, speed up the process and ensure that you’re not taking out a loan you can actually afford.  

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    Ongoing costs


    Registration is legally required in order to drive a car in Australia and is an ongoing cost that you’ll need to pay every year. The exact cost will vary depending on what state or territory you live in but is normally lower in regional Australian cities compared with major cities. The average cost for households in major Australian cities is $29.53 per week and in regional cities, it’s $27.90 per week.


    By law, Compulsory Third Party (CTP) car insurance must be purchased, and in many states and territories, it will be included in the cost of your vehicle registration. CTP insurance covers any personal injuries that you may cause to yourself or another person in the event of a car accident.

    In order for your loan to settle with any of our lenders, you’ll also need to take out comprehensive car insurance. This covers damage to your vehicle in the event of an accident, or in the case of things like fire, malicious damage and theft. You’ll need to have this in place before you can hit the road in your new car.


    This is an obvious one, but it’s one of the main car running costs that you’ll encounter. The amount of money you’ll spend on petrol will depend on how much you’re driving it as well as how fuel efficient the car is. In most cases, the bigger your car, the more petrol it will use. It’s a good idea to check how fuel-efficient your car is before purchasing it, so you can accurately budget for how much you’ll be spending on petrol.

    The alternative to a car that runs on petrol is an electric vehicle. Though they have a higher initial cost, they’re considerably cheaper to run as well as being a more environmentally friendly option. The weekly average fuel cost of a small SUV is around $28.37, meanwhile, the average weekly cost of charging an electric vehicle is approximately $11.70.

    Maintenance costs

    The amount you’ll need to spend on maintenance and repairs costs is dependent on the condition of your vehicle and how you look after it. All vehicles need to be regularly serviced in order for them to run smoothly and avoid any preventable accidents. It is recommended that you service your car every 15,000 kilometres or once per year (whichever happens first). This service will normally include things like oil changes, brake checks and tune-ups. You’ll also need to make sure that your tyres are inspected, and replaced if needed, every five years.

    Toll road costs

    There are only four cities in Australia that have toll roads (Sydney, Melbourne, Brisbane and Toowoomba), but if you live in one of these, paying for tolls could be a significant cost in owning a car. If you’re a car owner in Sydney, you can expect to experience the highest average spend on road tolls, at around $84.60 per week. Meanwhile, the average cost per week in Melbourne is significantly lower at $50.80 per week. The amount you pay in tolls is dependent on where you’re regularly travelling to, so this figure could be considerably higher or lower than the average amount.  

    Stamp duty

    Whether you’re buying a new or used car, you’ll need to pay stamp duty. Stamp duty is the tax imposed by state and territory governments for certain transactions and documents, including car registration and transfers. The amount you’ll need to pay is dependent on which state or territory you’re living in. 

    Roadside assistance

    This isn’t compulsory, but getting roadside assistance can be a great idea, as they come to the rescue of several thousand stranded Aussie drivers every year. Roadside assistance can help you with flat tyres, dead batteries and can even send a locksmith if you accidentally lock your keys inside your car. Basic plans start at around $69 per year, but you can expect to spend up to around $360 if you’re wanting a oplan with better benefits and additional features.

    Got more car finance questions?

    Can I get a loan for a used car?

    Absolutely! Whether you’re getting your car brand new from the dealership, or a second hand model from a private seller, dealer or auction, Driva can help you finance it.

    How do loan repayments work?

    When you take out your loan, you’ll need to make regular loan repayments (plus interest and fees) to pay the loan back. These payments are normally made monthly, but some lenders will give you the option to make weekly or fortnightly payments instead if this suits you better.

    What environmentally-friendly car options are there?

    With rising petrol prices and increasing environmental concerns, having an environmentally-friendly car might be an important factor for you. If you’re buying your car new, you’ll normally be able to check the fuel consumption of the car on a label displayed on the window of the car. This will show you the carbon dioxide emissions as well as fuel consumption in litres per 100km (the lower the better!). It’s important to note that the amount of petrol you use is also dependent on other factors like the traffic conditions, your driving style and the condition of the car. 

    If you want to compare the environmental performance of a range of cars in Australia, we recommend checking out the Green Vehicle Guide. Electric vehicles are also becoming more and more popular as an alternative to petrol cars. 

    Can I get a loan if I have a bad credit score?

    Each lender has different lending criteria, so even if you’re not happy with your credit score, there may still be some loan options available to you. Though for some lenders your credit score may be one of the main factors used to assess eligibility and determine rate, for other lenders there are other factors that are more important. These might be the type of car you’re buying, your living situation or your income. 

    When Driva calculates your personalised rates, we’ll automatically be able to tell you which lender you’re eligible for given your credit score. If you’re interested in finding out your credit score, or understanding why it is the way it is, you can do so for free with our friends at Equifax

    Summing up

    So there you have it, our complete overview of all the costs associated with owning a car. While the process of buying a car can seem quite daunting, it’s also a very exciting decision and one that will give you an immense amount of freedom! There’s no one perfect way to buy a car, as everyone’s personal and financial situations are completely different. This makes it especially important to do your research to make sure you’re getting a deal that works for you. If you’re interested in taking out a car loan to finance your new set of wheels, you’ve come to the right place!

    To get your car finance journey started, you’ll just have to tell us a few details about you and the car you’re wanting to finance, and we can give you personalised rates in just minutes! From there, you’ll have access to your Driva Dashboard and all your best eligible rates from our panel of more than 30 lenders. If you're considering lowering your fuel costs with an eco-conscious electric car, check out Driva's competitive EV loan options.

    Once you’ve decided on your perfect lender, the approval process generally takes between 2 hours and 2 days, depending on the lender. If you’ve got any questions about car finance, from obtaining finance to exactly how loan repayments work, feel free to get in touch! Our friendly car finance team is here to help, just give us a call on 1300 755 494 or email us at hello@driva.com.au

    Maddie Barclay

    Maddie is the Marketing Coordinator at Driva and our resident blog writer on all things car finance. When she’s not discussing the ins and outs of vehicle loans, you can probably find her at the beach or spending time with family and friends. 

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