Cost of owning a car in Australia

After you’ve bought a car, it may seem like the big expenses are firmly in your rear view mirror. But there are actually a number of car running costs you’ll need to budget for.

From registration fees to getting your car regularly serviced, we’ll cover some of the costs you’re likely to encounter as a car owner.

What are the ongoing costs of owning a car?

Some of the main ongoing costs of owning a car can include:

• car insurance
• registration and licence fees
• fuel
• servicing and maintenance
• car loan repayments

Car insurance

In Australia, compulsory third party insurance (or CTP insurance) is mandatory, and therefore an important part of car running costs. It can protect you financially if you injure or kill someone in a car accident. Except in NSW, CTP insurance is usually included in your registration cost.

You may also decide to take out a higher level of insurance with a third party property damage, third party fire and theft, or comprehensive car insurance policy. Comprehensive car insurance provides the highest level of cover and it is typically also the most expensive.

Comprehensive policies can also include roadside assistance as a standard or optional extra, or roadside assistance can be bought separately through a motoring club such as NRMA, RACV or RACQ.

The cost of comprehensive car insurance will depend on factors such as your age, the vehicle you are insuring, where you live, your claims history and the excess you choose.

You might also like to shop around and compare policies.

Registration and licence fees

You’ll also need to pay ongoing car registration fees and drivers licence fees. The cost of your registration will vary depending on where you live, as well as factors such as the type of car you have and vehicle specifications. As we mentioned, depending on which state or territory you live in, your registration fees may also cover the cost of CTP insurance.

The Australian Automobile Association (AAA) told Canstar the typical household paid $30.17 per week for registration, CTP and licensing costs, or about $1,569 in yearly costs, based on figures from the end of 2022.

Fuel

To keep your car moving, you’ll also need to pay for fuel on a regular basis.

According to AAA, the average price of regular unleaded petrol was 184 cents per litre in both Australian capital cities and regional areas in the last quarter of 2022. For the typical household with two cars, this equated to spending $98.31 a week on fuel, or about $5,112 a year.

But fuel prices can differ from suburb to suburb, sometimes by as much as 40 cents a litre, so it’s a good idea to shop around and top-up when you spot what you think is a reasonable price.

One way to help you do this is by downloading a fuel monitoring app. There are a number of fuel apps such as MotorMouth, Fuel Map and Petrol Spy that will search current petrol prices and show you where you can find the cheapest fuel in your area.

You can also keep track of regular expenses like fuel using a budgeting app, such as the Canstar’s App.

Servicing and maintenance

Another running cost to factor in is getting your car serviced. Regular servicing is important to make sure your car stays in good shape and it can potentially help you avoid more expensive issues down the track.

So how often should you be getting your car serviced? According to AutoGuru, the basic rule is that you should service your car every 10,000 kilometres or six months, whichever occurs first.

AutoGuru found that the average cost of a car service in Australia is $216 for a minor service and $370 for a logbook service. The AAA put the weekly price of servicing and tyres at $31.48 per week, or about $1,637 per year for a typical household.

But according to research from Canstar Blue’s 2022 Car Servicing Chains report Australians spent more than $430 on their most recent servicing, with two-thirds of those surveyed also not sticking to their logbook servicing recommendations.

The cost can vary depending on your car’s make and model and what is required, including repairs. Because of this, it can be a good idea to have an emergency fund at hand so you are able to cover any large out-of-pocket costs.

Loan repayments

If you bought your car using a car loan, you’ll also have to make regular loan repayments until the loan is paid off. This may be your biggest ongoing cost.

How much your loan repayments are will largely depend on how much you borrow, how long the loan term is, the interest and the fees charged.

You can use Canstar’s Car Loan Repayment Calculator to estimate car loan repayments (noting that it does not consider all fees and charges).

Car Loan Repayment Calculator

If you don’t make your loan repayments on time, you could risk damaging your credit score. Your lender may also repossess your car if you have taken out a secured loan, or take you to court to recover the outstanding amount.

In addition to these car running costs, it’s worth factoring in any parking and road toll costs you may need to pay, as well as car depreciation.

Although depreciation isn’t an actual cost, it’s important to keep in mind that your car will generally lose value over time. Depreciation can vary depending on factors such as the make and model of your car.

Cover image source: alexfan32/Shutterstock.com.