Smart car buying guide: Making the right choice for you
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Buying a car is a big decision, and it’s not just about choosing the make and model. Whether you’re buying new or used, it’s important to understand the full cost of ownership and how different choices can affect your budget over time. This guide breaks down upfront and ongoing costs, compares new and used cars, and offers tips to help you buy with confidence.
Breaking down the costs
The price tag of a car is only part of the story – and it’s not where the costs end. Owning and running a car comes with ongoing expenses that can add up quickly. According to the Q1 2025 Transport Affordability Index by the Australian Automobile Association (AAA), the national average weekly transport cost for a household is around $444 - that’s more than $23,000 a year. This figure covers all transport costs for a typical household with two cars, not just one vehicle.
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Stamp duty
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This is a one-off payment when transferring ownership of a vehicle. It applies whether you’re buying new or used, from a dealer or private seller. Rates vary by state and are usually based on the car’s market value or purchase price (whichever is higher).
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Transfer fees and registration
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You’ll need to register the car in your name, which may involve a transfer fee and annual registration costs. These vary depending on your location, the type of car and its engine capacity. Electric vehicles may qualify for discounts in some areas.
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Insurance
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Compulsory Third Party (CTP) insurance is mandatory across Australia and covers personal injury. Most drivers also take out comprehensive insurance, which covers damage to your car and others. Costs depend on your driving history, location and how the car is stored.
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Servicing and maintenance
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Regular servicing keeps your car running smoothly and helps avoid costly repairs. New cars may come with capped-price servicing, while used cars can vary depending on age and condition.
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Fuel and running costs
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Fuel efficiency varies widely between vehicles. Consider how far you drive each week and factor in fuel prices, especially if you’re choosing between petrol, diesel or electric.
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Depreciation
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Cars lose value over time and new cars tend to depreciate faster. This can affect resale value and long-term affordability.
New vs used: what’s right for you?
Choosing between a new or used car depends on your budget, preferences and how you plan to use the vehicle. Here’s a closer look at the pros and cons of each:
Buying a new car
- Comes with a full manufacturer warranty (usually 3-5 years)
- Offers the latest features, tech and safety upgrades
- May include capped-price servicing
- Allows the buyer to choose colours, trims and optional extras
- Tends to have fewer mechanical issues early on
- Depreciates quickly in the first few years
Buying a used car
- Lower upfront cost
- Slower depreciation compared to new cars
- May still have warranty coverage if only a few years old
- Wide range of options available through dealers, private sellers or auctions
- Requires careful inspection and service history checks
- May not include the latest features or safety tech
Private sale vs dealer
Budgeting tips and tools when planning to buy a car
Before you commit, take time to plan your budget and understand what you can afford, not just now, but over the life of the car.
to estimate repayments
Ready to buy with confidence?
Contributor | Andrew Gamble, Head of Sales - Asset Finance
Andrew brings more than 20 years of experience in the finance industry. His strategic vision, leadership and his customer centric approach has contributed to the significant growth of Pepper Money's Asset Finance business. Read more.
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