Mozo guides

The costs of buying a car

couple discussing cost of a car with vehicle finance

Did you know that there’s such a thing as ‘dealer delivery’? Are you aware that ‘on-road’ costs are sometimes added as a cost on top of what you pay for your car? Among other things, these are just some of the costs you need to be aware of when buying your next car.

We go into it a little further here. If you’re already familiar with the costs of buying a car, it’s still worth your while to take the time out to remind yourself of a few pointers. There may be some new ones here too!

What exactly does ‘on-road’ costs mean?

The truth is, a lot of people are confused about this one. Sometimes dealers talk about on-road costs with ‘no more to pay’. But this is usually a promotion or an ongoing deal to attract more customers. So what you need to know is that for most ‘no more to pay’ offers, the actual on road costs are factored into the price of your new car. Some of these charges include:

  • Dealer delivery charges This charge is set by the dealer's and covers the cost of delivering the car from the maker to you.
  • Inspections Normally applying to used cars, an inspection by a third party ensures an honest examination of the vehicle you’re enquiring about. 
  • Car registration Buying your next car from a dealership, whether new or used, usually means that your car rego and stamp duty is sorted for you. Buying from a private seller? Then you'll need to process your own registration to hit the road.
  • Stamp duty is when you pay the government a percentage of the value of the car at time of purchase. The lower the price, the lower the stamp duty!
  • Insurance There’s a few you need to consider, but one that’s absolutely compulsory is your CTP insurance, also known as Compulsory Third Party insurance. You may be saving money on the cost of the car, but with inspections, repairs and other maintenance, you could spend more time keeping it in good nick when buying a second hand car.
    What about insuring your actual car? If you can’t afford to replace or repair it after an accident, then you’ll want to consider taking out separate car insurance on top of everything else and it could also cover the other car involved, should you get full comprehensive cover.
  • Service Buying a fancy new car? Then your routine service costs are going to seem fancy also. And by fancy we mean costly. In contrast, the more affordable your new car, the more affordable your service costs may be if you've kept your car in good condition. Makes sense! Keep an eye out for promotions that offer free service for the first year or more.

The extras

If your fantasy car has a sporty spoiler, white leather interior, and an extra shiny dash set of rims, then expect to pay extra on top of the sale of the car. 

If your heart’s set on adding some bling to your wheels, and we haven’t even begun to talk about the motor, then you could consider whether it is it right for you to add your extras to your car loan before driving away. When paid over the course of 3-5 years for instance, it could allow you to pay it off over time provided you can make the necessary payments on time and can afford all other fees involved.

Tips on buying a used car from a private seller

So if a new car depreciates the second you put pen to paper, then you may as well buy a second hand car, right? Why fork out for a new car when the value doesn’t hold!

Well, you can kiss the alluring ‘new-car’ smell goodbye, but you may be saving big bucks in the long run. As long as your next set of wheels runs super smooth. Because we don’t want any bumps on the road to take out your dodgy wheel alignment. We go into buying a used vehicle a little more to smooth over any confusion:

  • Car history report: means literally just that. If you’re buying from a private seller, you’ll need the VIN of the vehicle. You can do a straightfoward check online to see the history of that individual car for a low cost. 
  • Paperwork: You’re going to need to see everything from rego papers to pink slip and driver’s license. It’s best to purchase a used car with at least 28 days validity when it comes to your rego and pink slip. This way you have enough time to sort out the name change/transfer and registration of your new car.

Cost of car

Didn’t save enough to pay for your car in one lump sum? Then you will need to arrange for your own finance. Unlike a new or used car dealership where they can sometimes arrange in-house car loans, you may need to approach your own lender, apply for a car loan and either supply cash or direct deposit into the private seller’s bank account.

  • Stamp duty: Just because it’s a private sale, doesn't mean you can avoid costs like stamp duty and compulsory insurances. No point in huffing about it either, we all have to pay it.
  • Road side: She’ll be right mate. Ahhh. Nup. Whatever the situation, for a small monthly or annual fee, you’ll be glad you subscribed to a roadside assist service. There are many reputable companies that will come out for anything from keys locked in to flat battery.
  • Tyres: How’s the tread? Your seller may or may not be honest about when they last changed them, but a new set of wheels could be just the thing for making your car drive like a dream. However, make sure to budget for the costs for the new set of wheels.
  • ID: So, do the personal details on the rego papers match your seller’s details for their driver’s license? Don’t hand over any cash unless you’ve check with REVs first.
  • Odometer: A six year old car with super low kilometers? Sounds fishy. Ask to see the log book and make sure the details measure up. If there isn’t a log book available or it appears as though the log book or the odometer has been tampered with, then we’re afraid the offer may be too good to be true and you’re going to have to walk in the other direction.

Knowing how much you can repay is just a click away! Try Mozo’s car loan comparison calculator to see what best suits your budget.

Gabriella Margerison
Gabriella Margerison
Personal finance writer

Gabby is a seasoned consumer and lifestyle-focused writer, with a Bachelor of Communications and RG146 certification for Generic Knowledge under her belt. Gabby has over a decade of experience identifying the best deals in retail, travel, and tourism for major consumer brands including DealsDirect, Luxury Escapes and Brands Exclusive. At Mozo, Gabby combines her personal finance and editorial knowledge with her passion for helping Australians make the most of their money.

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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