The real cost of buying a car

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 Last updated: 8 May 2024 |  Estimated read time: 3 Minutes

While buying a car can be exciting, the initial cost of the vehicle itself is only one of the many financial factors you might want to consider. 

According to the  Q4 2023 Transport Affordability Index by the Australian Automobile Association (AAA), the national average cost of running a car in Australia is estimated to be around $430 per week, per household – that’s more than $22,000 a year. Costs vary across the country, with Sydney amongst the highest, with an estimated yearly cost of nearly $28,000 in comparison to some regional areas with costs around $19,000 per year. 1

Knowing what you're in for before you step into the dealership can help you set your goals with what you know you can afford at the end of the day. To help be prepared, here’s a look at the costs that will impact the total price you end up paying. 

Stamp duty

Stamp duty

Stamp duty is a one-off payment when transferring ownership of a vehicle and is payable whether you’re buying a new or used car, from a dealership or a private seller. 

Depending on where you live in Australia, the stamp duty you pay can differ a lot. Generally stamp duty is based on the market value of the vehicle or the amount of money you paid, whichever is greater. So make sure you check with your local vehicle registry office on the correct rates you will have to pay. 

Transfer fees and registration

Transfer fees and registration

When you buy a car, you’ll need to transfer the ownership (that means register the vehicle) under your name. Again, transfer fees, and the time limit you’re given to complete the transfer can differ depending on where you live in Australia. 

You will also need to pay for your car registration every year. The annual cost to renew your registration will depend on things like the class and engine capacity of your car (electric vehicles get rego discounts in certain areas) along with your driving record. 

You will also need to take out Compulsory Third-Party (CTP) insurance. CTP is mandatory in all Australian states and territories. It provides compensation for personal injuries caused by motor vehicles, but be aware that it doesn’t insure the vehicle itself against damages. 

Comprehensive insurance

Comprehensive insurance

Most people would usually take out comprehensive insurance for their vehicle. This is separate to CTP and covers the cost of repair of your car if it’s involved in an accident. It isn’t mandatory, however we can feel the judgement coming from your parents if you opt to drive uninsured. Comprehensive insurance can vary between insurers and depends on where and how your car is kept overnight, how far you drive each year, and of course your licence class and driving history.  
Pepper Money is not able to provide insurance advice so you may need to discuss your relevant needs with a financial planner or insurance broker. 
Servicing your vehicle

Servicing your vehicle

From time to time, you’ll need to service your car to ensure that it stays safe and roadworthy. The owner’s manual tells you how often a service is needed but bear in mind that your car might may need servicing a bit more often as it gets older or has run up a high mileage. 
Depending on how old your car is and the service centre you’re taking it to, the amount of work it needs each time could differ. Cost wise, you’d be looking to budget for a range of over $100 for smaller cars to over a few thousand dollars for luxury vehicles, so be sure to factor that into the ongoing cost of owning your car.
Other ongoing costs

Other ongoing costs

Besides paying for stamp duty, registration, insurance, and servicing, there are also some general ongoing maintenance costs you'll need to consider. These include:

  • Petrol

  • Replacement parts and servicing

  • New tyres

  • Road tolls and parking

  • Roadside assistance

  • Loan repayments, if you’ve got a car loan

Looking for a new car? We're here to help

Before you buy a car, or take out a loan to do so, it's important that you work out if you are also able to manage these extra costs. That way you can be sure buying a car isn’t too much of a burden on you at the end of the day. To get you started, find out how much your repayments might be using our car loan repayment calculator


1Australian Automobile Association. Comparing transport category costs over time. Per household (Q4 2023):

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