Buying a car: A guide to getting your first set of wheels

By Polly Fleeting ·

So you’ve decided to buy your first car. Hello freedom! 

But there are a few costs to know about first:

  • Purchase price
  • Delivery fee
  • Vehicle inspection
  • Stamp duty
  • Car loan application fee 

Okay, let’s pump the breaks a moment

Your first car is an exciting time. Whether waving farewell to driving mum’s minivan or simply vowing to never set foot on public transport again. It’s a milestone. But you do need to weigh up these expenses and consider how you’ll plan for them.

Mozo Director, Kirsty Lamont says that before getting caught up in the exhilaration of buying a car and snapping up the first one you see. It’s important to know exactly what sort of financial commitment you are making.

“Because the truth is, cars can cost quite a bit of money and there may be some hidden price tags you may not have thought about, from one-off upfront expenses to annual and ongoing costs that last as long as you hold the keys,” Lamont says.

Basic upfront car costs: What you pay 

Whether you’ve saved up for your new wheels or need the help of a car loan, there are a few things to consider: 

  • Purchase price 

Let’s start with the most obvious costs you’ll face - the price of the car you intend to buy. Ultimately, you need to assess whether the purchase price of a car aligns with its life expectancy. For example, while a new car may be more costly to buy straight off the bat, it is likely to need less servicing and repair. On the flip side, a used car is the cheaper option upfront but could end up costing you more at the mechanics over time. 

  • Dealer delivery fee

If you buy a car from a dealership and opt for it to be delivered, it’s likely you’ll be charged a dealer delivery fee. Remember, this cost is in addition to the purchase price of the vehicle. 

  • Vehicle inspection & car history report 

Buying a used car? It’s always a smart idea to get both a vehicle inspection and a copy of the car’s history report. While these both come at an extra cost, they allow you to get a full idea of how well the car runs. For vehicle inspections, get in touch with your local mechanic or your likely car insurer. 

To find a car’s history report, head to the  Personal Property Securities Registry (PPSR). Here you’ll find out things like if the previous owner still owes money on the car, its approximate worth, the odometer reading, write-off history and if it’s been stolen. 

Used car tip:
If the car history report or vehicle inspection comes back with any red flags, be prepared to walk away. Buying a dodgy car isn’t worth it. 

  • Stamp duty

This is a one-off cost you pay to the government when you purchase a car. Stamp duty costs differ from state to state and are calculated in relation to the purchase price of the vehicle you are buying.  

  • Car loan application fee  

Saving up for a car can be tough, but that’s what car loans are for. While it is crucial to compare interest rates when considering a loan (as it determines what you pay over the life of the loan), you also need to turn your attention to the application fee. 

According to the Mozo database, car loan application fees can go from $0 all the way up to a hefty $995. It’s important to consider that while some loans may come with a low interest rate, this may be offset by a large application fee (or vice versa). 

Kick the tyres on a few loans

Along with a low application fee, there are a bunch of other features that can save you money on your car loan. Check them out below.

Managing director at car loan provider, Marie Mortimer says that it’s important to compare car loans before signing the dotted line. 

“We always recommend that buyers do their research and look for the best deal available in terms of both rate and features,” she says. 

“With the many car loans out there, it pays to research to ensure you're getting the deal that's most suitable to your needs and financial circumstances.” 

Mortimer also says that it’s smart to get pre-approval before you start shopping for your first car. 

“The first thing you should do before visiting the car dealerships is consider how much you can afford to borrow (including your interest repayments). At, we offer pre-approval for a certain amount of money for your car loan so you can negotiate a great deal on your dream car at the dealership.”

Ongoing car costs: What you pay regularly 

Here’s what you’re in for to own and operate your car:

  • Rego payments
  • Car insurance
  • Car loan repayments

So you now know what sort of fees you’ll have to cough up when you first buy your car, but what comes next? Well, some regular car bills. 

Depending on what sort of bill you are paying, these could come around annually, monthly, fortnightly or even weekly. So it’s important to incorporate these costs into your regular budget. Here’s what you’ll pay: 

  • Rego

Car registration is a large cost that you need to account for once a year. However, this differs from state to state. For example, some states include things like compulsory third party insurance (CTP) in the price of rego, while others like NSW, require drivers to take out a separate policy. 

All drivers must have CTP as it covers your legal liability for any injury or death you have caused to others while behind the wheel. For a full breakdown of CTP requirements check out our comprehensive car insurance must-haves guide

Also bear in mind, if you are registering a used car you may be required to conduct a safety check, such as a e-Safety check or pink slip. This can be done at a certified mechanic and is an additional charge on top of registration and CTP insurance.

  • Car insurance 

On top of CTP, it’s a good idea to take out further car insurance to protect yourself and your vehicle (and avoid heavy repair bills). Depending on which insurance provider you choose, you may be able to choose to make annual, monthly, fortnightly or even weekly car insurance payments. 

Here’s a rundown of the different types of car insurance:

Co-founder of car insurance provider Huddle, Jonathan Buck says that first-time car buyers should make sure they aren’t paying for things they don’t need on their policy. 

 “Insurance for young people is already expensive, so the best advice is to do your research and shop around until you find the right policy at the best price,” he says. 

“We’ve seen a lot of our customers buy third party property, and fire & theft policies thinking it’s Compulsory Third Party Insurance (CTP). So the first thing that first time buyers need to check is that they are purchasing the right one. If they are confused, friendly help is usually only one call away.”

Buck also says that when it comes to making a claim on your insurance, issues can arise if you haven't provided truthful information when buying your policy. It’s crucial to be honest when building your quote as this will make the claims process a lot quicker and easier. 

Don’t steer away from potential discounts and extras 

You may not know it but there are plenty of ways to snag a discount on your car insurance policy. These include multi-policy discounts, online discounts, restricted driver discounts, family discounts, loyalty discounts and fuel efficiency discounts. You never know what you might qualify for. 

It’s also worth opting into roadside assistance. While it does add an extra cost to your policy, it means that professional help is only a call away if you ever find yourself in a sticky situation.  

  • Car loan repayments

Remember the loan you used to buy your car? As much as you may wish it weren't true, you need to pay that back. Like your insurance payments, you can often choose a monthly, fortnightly or weekly repayment schedule on your car loan. To find out how much you’d be paying in regular repayments, take a look at our car loan repayment calculator

Car loan repayment tip:
Consider taking out a loan that allows you to make extra repayments on top of your regular ones. That way you may be able to pay down your loan sooner! 

What you pay here and there 

The truth is there are plenty of other things you need to pay now and again when it comes to your car. These include: 

  • Petrol 
  • Tolls 
  • Fines 
  • Servicing and maintenance 
  • New tyres
  • Parts and repairs  

“While it’s true that things like the purchase price of a car, loan fees and repayments, registration and car insurance can all come with solid price tags, there are also other smaller costs that can add up over time,” Kirsty Lamont explains. 

“Things like petrol, tolls, fines, servicing and repairs are all expenses that come straight out of your pocket. It’s important to incorporate these costs into your daily, weekly or monthly budget, as well as your rainy day fund, so you aren’t left with an empty wallet when you head to the petrol station or mechanic.” 

Check out these handy tips to cut costs on your car:

Want to start comparing car loans so you can get your first car? Check out the options below or head over to our car loan comparison table for even more!

Compare Car Loans - last updated January 16, 2021

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Polly Fleeting
Money writer

Polly Fleeting is a personal finance writer here at Mozo, specialising in loans and credit cards. Her work is aimed at helping people find ways to make smart product choices, reduce debt and get more for their hard-earned dollars. Polly has a degree in Journalism from the University of Technology, Sydney. She is also ASIC RG146 (Tier 2) certified for general advice.