The Real Cost of Your Car
Having your own car is usually your first step to freedom. No more having to ask someone else to give you a lift. After reading this, you might want to embrace public transport for a little while longer as the real cost of your car might make your eyes water.
Aside from the initial cost of your car, you need to factor in the cost of running your car.
- Loan repayments;
- Insurance;
- Registration;
- Petrol;
- Servicing; and
- New tyres.
The Real Cost of Your Car
Safety – When choosing your car the first thing that you need to consider is safety. You want your car to do what is designed to do, by that we mean you want to the brakes to work, the airbags to work, the car to point in the direction you are steering. If a car has been in an accident you need to make sure it has been repaired properly.
Initial Cost of the Car – Save up as much as you can before you buy your car if you do need to borrow money, pay it off as soon as possible. If you find the perfect car at a bargain price – you need to find out why it’s cheaper than what others are asking. Check out the Redbook website, you can plug in the vehicle Make/Model and Year of the car to get an idea of what the general price to buy will be.
Dealership vs. Private Sale – Buying from a Dealership will most likely be a more expensive than buying from a private seller. Read more about the benefits of buying from a dealership here. If you are buying from a private seller you need to get as much history about the car as possible so ask a lot of questions. Check out this website PPSR (Personal Property Securities Register) to find out if the car has any money owing on it. Why is this important? If the car has money owing on it and the seller stops making payments the car can be repossessed and you will be on the bus.
Vehicle Inspection – For private sales get a vehicle inspection before you hand over your money. Have an independent qualified mechanic look over the car so you can be informed about the true condition of the car. Note: You will need to pay for the inspection.
Loan Repayments – If you get a loan you must keep up regular payments (pay more than the minimum if you can). Be careful when getting a loan – some lenders will give you a heap of money but you have to pay it back with interest, so this means you pay back more than you initially borrowed. If something goes wrong and the car gets written off (crash, theft etc) – you still have to pay back the loan. You might be able to claim on insurance, this will only be the market price or agreed price of the car, so if you paid more than what you can insure it for you still need to pay the balance of the loan.
Service – Get your car serviced regularly, and talk to your mechanic about any big repairs that may need to be done. The older the car the more likely big jobs are coming, things like replacing the clutch. As a general rule have the car serviced every 6 months or 10,000 km, whichever comes first, as every car is different refer to the car manual.
Licence – Don’t forget to factor in your licence renewal. For a standard licence you can expect to pay approx. $45 for one year or $150 for five years.
Tyres – New tyres start at around $100 per tyre. When they need to be replaced depends on how often you drive your car. Don’t forget your spare type. When replacing your tyres keep the best tyre for the spare.
Insurance – There are three types of insurance:
- Comprehensive is the highest level of protection;
- Third-Party covers fire & theft; and
- Third-Party covers damage to another person’s car or property.
Have a good look at insurance options. Aside from the cost of insurance, you need to take into account how much excess you will need to pay if you make a claim, the younger you are the higher the excess will be.
When adding up the real cost of your car the older your car is the more you are going to need to spend on it down the track. Try and save as much as possible to buy the best car you can afford. Remember, the car only has to get you from A to B don’t worry too much about what it looks like.
You also might like this article: Maintaining Your Car
