Bringing that childhood dream of buying a luxurious or sporty car to life can be a high point for many motorists.
The most obvious downside to a brand new car is the high cost – particularly if you decide to buy a premium vehicle. What many Aussies aren’t aware of, however, is that the driveaway price of your car isn’t the final expense.
There are several costs, both initial and ongoing, that can add up to a sizeable bill for those who splash the cash on a new coupe or convertible. We’ve taken a look at some of the important costs of running a car, and how they can be much greater for vehicles at the top end of the market.
Source: Real LIFE Edition
Registration & CTP costs
The most obvious difference between car classes is the amount they cost to register. State governments charge different amounts based on the weight and/or engine size of your car, meaning that upgrading from a mid-size car to a powerful sedan or 4WD can incur some hefty charges in your state or territory.
For example, consider registering a new car in New South Wales, where vehicles attract motor vehicle tax based on weight. For a typical four-door hatchback that weighs less than 1.5 tonnes, you’ll pay roughly $293 in tax (for cars between 1155kg and 1504kg).
Now, what would happen if you decide to upgrade to a luxurious 4WD that weighs much more? If your new car tips the scales at over 2.5 tonnes, you could be looking at up to a $650 motor vehicle tax – each and every year. Add in the 3% stamp duty for new cars in NSW, and you’re looking at another significant up-front cost.
Other states, such as Queensland, charge your registration fee based on the size of the car’s engine. A four-cylinder family car doesn’t attract nearly as high a fee as a six or eight-cylinder performance car, and the cost difference can be several hundred dollars per year.
The Queensland government also charge new car duty (i.e. stamp duty) which changes based on the value of the vehicle – for a four-cylinder car this is 3%, but for a 6 cylinder car this increases to 3.5%, and again to 4% for V8s and above.
The insurance costs of luxurious cars are perhaps the single biggest post-purchase expense. Costlier cars are more expensive to fix, meaning insurance companies will likely charge you a higher premium to cover their own risk.
According to Canstar’s car insurance database back in May 2016, there is a significant difference in the average car insurance premium between new and older cars. For a new car (registered in 2014 or later) being driven by a 45+ year old, the average premium across all states was $665 per year. By contrast, the same age group driving an older car paid an average of just $597 per annum.
The differences are even more visible when considering younger drivers, who are generally considered higher risk by insurance companies. Under-25 females paid an average annual premium of $1,766 when driving a new car, but a significantly smaller $1,561 for an older car. Males under 25 had an even more marked difference: those driving a new car paid an eye-watering $1,980 per year on average; those driving an older car paid $1,763.
You can read more about what car insurance costs for a new car, as well as some modern ways to reduce your insurance costs. Whether you’ve just purchased the ride of your dreams or are still looking for a great deal for your current car, you can easily compare car insurance products with Canstar. A snapshot is featured below with policies featured on our database that have links direct to the providers website. These results are based on a male policy holder aged 40-49 in New South Wales, and is sorted by Star Rating (highest to lowest):
Servicing is another area which can be a significant strain on your wallet with a premium car. Using the auto booking comparison site AutoGuru, we compared some cars of similar age and size – but with very different price and features.
The reference model we chose was a base model 2017 Mazda 3 manual, one of the most popular new cars in Australia. Quotes for a basic service from various mechanics around Brisbane ranged from $150 to $200, with a few outliers – not bad for a service you might have once or twice a year.
By comparison a 2017 BMW M3 – similar in size and age, but much more powerful and luxurious – would cost between $210 and $280 – and the cost of discrete components such as timing belts, brakes and engine parts is significantly higher than that of higher-volume manufacturers. If the cost of servicing is putting you off, check out the pros and cons of doing your own servicing.
The prospect of buying a fancy new car is certainly an appealing one with loads of potential benefits. Just keep an eye out for the aforementioned costs so that you’re not taken by surprise in the long run.