The Cost of Owning a Car

Whether it's your first car or you're adding to the household fleet, it can be hard to figure out the ongoing costs of owning a vehicle.

In Australia, people spend an average of 15.8% of their income on transport costs. [1] But where's all the money going?

Whether it's a new car or a used car, running costs can vary. So before you dive into the world of car ownership, it's important to know what the ongoing costs might set you back.

Check out our guide on what to consider before signing on the dotted line.

Registration costs change depending on where you are and what you drive. Larger car models might cost more in registration fees, while electric vehicles or those with smaller engines could be cheaper.

Generally, compulsory third party insurance (also known as green slip insurance)  will also be included in registration fees which can bump up the overall cost.

When it comes to driver’s licensing costs, the average annual price is usually less than registration fees. But if you still want to save money, you can try renewing your licence for a longer period rather than just year-on-year.

The annual cost of insurance is usually unique to your situation based on factors including the type of car you have, where you're located, your claims history and your driving record.

This is why it can be tricky to pinpoint how much you're likely to spend on insurance. The best way to find a close estimate of what it will cost is to get a car insurance quote.

In Australia, you’re legally required to hold compulsory third party insurance when you have a car to cover you for liability costs of causing injury or death to others if there's a car accident.

But you can also purchase car insurance policies that provide higher levels of cover including:

• Third Party Property Only Insurance: Third party property damage insurance covers you for liability costs for accidental damage your car causes to other people's property, including their vehicles.
• Third Party Property, Fire and Theft: Third party fire and theft provides the same cover as third party car insurance, but with extra protection against loss or damage to your vehicle due to fire and theft.
• Comprehensive Car Insurance: Comprehensive insurance covers you for loss or damage to your vehicle due to an accident, theft, severe weather, malicious damage and fire. It also covers you for liability costs for accidental damage your car causes to other people's property.

Each year you'll pay a car insurance premium, but you'll also have to consider paying an excess to go towards repairs if you make a claim. Make sure you also understand what's covered and what isn't so you know when out-of-pocket costs might pop up.

If you're looking to cut costs on car insurance, it's worth keeping an eye out for discounts and incentives where you can. For instance, some insurance companies will offer discounts such as Budget Direct Car Insurance's offer of 15% off your first year's premium if you buy online.

For a general understanding of what insurance in Australia can cost, here's a run down from the research team at Canstar.

*ACT not included in the data.

While they can be expensive and inconvenient, services are one of those necessary ongoing costs that help keep your car running.

Whether you have a new or used car, you'll want to have it serviced regularly to make sure it stays in the best condition for as long as possible. Depending on the type of vehicle and use of your car, this generally means getting it checked every 10,000 km.

Car servicing centres often give a price based on the car and the level of work that needs to be done on top of the general service.

However, some dealers sell cars with capped price servicing (CPS) which means your service cost will stay at the same price for a period of time, depending on the deal.

On top of getting your car serviced, you may need to get a new set of tyres every two to three years if your tread gets too low or if you get a flat tyre.

According to the Australian Automobile Association, annual servicing and tyres cost the average Australian around $1,700. [1]

The cost of petrol can end up being one of the biggest ongoing expenses for car owners, particularly with fuel prices on the rise in Australia. One of the easiest ways to save is to modify your driving habits. This could include cutting down on your driving or even changing the way you drive including avoiding hard acceleration, braking and revving the engine.

It's also worth using an online fuel map to hunt down the cheapest fuel in your area and keeping an eye out for fuel discount apps and incentives that pop up.

The weekly cost of fuel will depend on whether you drive petrol or diesel, how much your car weighs and how much you travel. However on average in 2023, Australian drivers spend around $90 a week on fuel. [1]

Car ownership can be a massive financial achievement. But sometimes, you need a little help to get yourself over the line, particularly when you're buying a new car.

A car loan will save you from paying a large upfront fee. But on the downside, car loans mean you'll have to account for ongoing repayments which also usually include interest.

While those are the big expenses, you're likely to come across plenty of other little costs when you own a car. Thankfully none of these are too extreme, but if you want to get a full estimate of what a car will cost you, it might be worth considering these factors.

Part of everyday maintenance is keeping your car looking clean both inside and out. To do this, you might go to a car wash once a fortnight and spend around $30 getting your car cleaned.

Or if you're looking to cut costs in the long run, you might spend around $30 on cleaning gear and wash your car at home. This should last you around six months before you'll need to stock up again. [11]

Car batteries generally last anywhere from three to five years depending on the type of battery and use of your car. But there's also always the chance of accidentally draining your battery by leaving it running on its own for too long.

The average price of a replacement battery can be anywhere from $100 to $450 depending on the make and model of your car. While a premium battery, which can last up to six years, can cost upward of $1,000. [12]

Plus, if you get a flat battery and need to call someone to replace it, you might also have to cover a callout fee if you don't have Roadside Assistance.

If you're driving in more populated areas, particularly through the capital cities in New South Wales, Queensland and Victoria, tolls can add up.

The average Australian driving around Brisbane, Sydney and Melbourne could spend up to $65 a week just on tolls alone. [1]

Roadside Assistance might already be included with your insurance, particularly with comprehensive policies. But if not, standalone roadside assistance can be simple to organise.

A good deal is around $70 to $90 a year. However some policies could be more expensive if they offer different options.

When choosing Roadside Assistance, make sure it covers:

• Emergency fuel
• Key rescue if you lock your keys in the car
• Tyre and battery assistance
• Breakdown towing
• Unlimited callouts across Australia

After you've fronted the initial purchase price, the total cost of owning and running a car will be unique to your situation.

But taking into consideration the factors mentioned above, we've provided a rough estimate of what it might cost a typical household in a capital city of Australia to own a car based on figures from industry experts.

While the number won't be exactly what you can expect to pay, it might be a good ballpark figure to add to your budget in the early stages of planning for a new car or a second car.

Once you pay the upfront cost of buying a car, it's easy to think the big spending is done. But it tends to be those smaller running costs that can get in the way.

From car washing to flat batteries, it's always better to be safe than sorry and over-budget for a car so you'll always be prepared if an emergency arises.

And with big yearly or monthly payments like registration costs or loan repayments, it can be a good idea to put money away each week to ease the burden when the bill comes.

While regular payments can be inconvenient, being prepared is key to making sure you're not left behind.

Missing out on paying bills like car loan repayments, tolls or insurance costs can mean you'll end up paying more in the long run to cover late fees, fines or worse.

Costs can start to add up when you have a car. So it's important to make sure you're always getting the best deal and not overspending on anything you don't have to.

Whether it's shopping around for better insurance policies, renewing your licence for a longer period or using a fuel map to fill up for less, there are plenty of ways to cut down the weekly bill.