The cost of a car, and why economical is best
The cost of a car is far from the price you see walking around the showroom. This can be problematic, as there's nothing worse than buying your dream car to end up not using it simply because it's too expensive. As fun as it is to drive a 4x4 or sports car, it may not be the best car for you. If you look closer and consider all costs you may have to pay, you will be well on your way to finding the perfect car for your budget.
Selecting your car
Firstly, be honest with yourself about what you are looking for in a car. A large four-wheel drive will use far more petrol than a small sedan. Will you be using it for your daily commute or only for occasional weekend off-roading?
Hatch-backs usually offer the same amount of space in the cabin as many larger SUVs. If what you're looking for is storage, this could be a smart option. Whether you are carrying toys for the kids or bikes for a weekend cycle, you will also have the option to fold down the seats and extend the room if needed.
If you can, find someone who owns a car like the one you are considering and ask them what it's like to have one. Alternatively, you can always arrange a meeting with a buying agent, who will professionally negotiate the cost of a car and be an objective voice on the true cost of the vehicle – saving you from any ambiguous wording or sneaky sales tactics.
Registration and compulsory costs
Unfortunately, the cost of registering your car is waiting for you as soon as you've made your choice. To add insult to injury, if you live in NSW for example, you can also expect an additional payment for your CTP. The registration amount will differ depending on what state you live, so be sure to check your local department of transport website for further information.
Despite these costs being compulsory, the amounts do differ. Smaller and cheaper cars will face lower stamp duty costs and registration. Where your choice of CTP provider will also have some impact on the cost. It's worth considering the ways that you could save on these charges, to make the initial bill less shocking.
Maintenance and repair
There are many costs that as a car owner you will endure just to keep your car safe and on the road, such as oil changes, tune-ups and brake pad adjustments. Unfortunately, these costs will vary significantly dependent on the model. Imported and luxury vehicles will cost you a lot more when it comes time for a regular service. A specialty car needs a specialty mechanic and there aren't too many of those!
The benefit of more common models is that the parts required for maintenance or repairs are mass produced and there are plenty of mechanics to do this for you. The same can be said about tyres. It's expected that you will need four new tyres every 45,000km. On average that is a few years driving, but when the cost comes, you'll be glad you've saved on the charge.
The cost of running a car should be represented in your budget as any cost you endure. That means factoring in the petrol you're using in your commutes, or any big Sunday drives. Different cars have taste for different petrols. If you're using a budget petrol and oil in your car, you may find you will need to shell out once it's time for a car service.
Consider the cost of any toll roads you frequent. A few dollars here and there can be handled, but if your daily commute is racking up the toll charges, you might want to consider an alternate route. If you've opted for a fuel-efficient car, you may find the cost of driving the alternative route may be less than the charge of the toll road.
Purchasing your car
Once you've decided which car you want and you've thought about the daily cost of running the car, you should think about how you could get your car for the best price.
Firstly, it pays to shop around. Selling cars is a highly competitive business and the power balance almost always falls in favor of the buyer. Visit several dealers, take a look at what their price is and don't be afraid to mention it to dealers.
You may find you'll have some extra luck at the end of the month, as many sales people have to meet targets, so you may be able to bag yourself a bargain if the dealer is willing move a bit in order to hit their targets.
Most of us have a dream car in mind and using an economical option for a few years may give you the breathing room to save for something more special in the years to come.
And if that all seems a bit much, bicycles are always an option.
Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Disclosure Statement or Product Information Document before making any decisions about whether to acquire a product