Pre-purchase inspection

Cars are complicated pieces of machinery. Before you buy a second-hand car, it’s a good idea to get a pre-purchase vehicle inspection. This is where you pay a mechanic to inspect the car to make sure it is in good working condition, before you commit to buy it.

It’s also worth checking that you’re not buying a stolen car.

Saving up vs getting a car loan

You can buy a car by paying for it upfront or taking out a car loan. A car loan is a personal loan for a car. As with all loans, you have to repay the cost of the car (the loan) as well as any interest and fees. You usually get a car loan for between one and seven years.

Saving for a car can be achievable. It’s just about setting a savings goal, making a plan and sticking to it.

If you are going to get a car loan, it's important to research your options before you go to a car dealership, so that you’re not pressured into a loan that might not suit your circumstances.

Shopping around for the best loan could end up saving you thousands of dollars in interest and fees.

Once you’ve decided how you’ll pay for the car, keep an eye out for scams, particularly if you’re buying a second-hand car. If a car deal seems too good to be true, it probably is!

Read more on other ways to pay

Read more on asking for help

Insurance

Insurance is a 'just in case' safety-net. You pay an insurance company money and in return they promise to help pay the costs of fixing things when they go wrong.

Cars are expensive to fix, so by insuring the car, if it gets damaged, it will lower the costs of fixing it.

You get an insurance policy by paying a fee called a ‘premium’, usually monthly or yearly. On top of paying the premium, you also need to pay an ‘excess’ when you make an insurance claim. It is a set amount of money you will have to pay before your insurance will kick in to pay for damages.

There are different types of car insurance, each with varying costs:

• Compulsory Third Party (CTP): in Australia you have to have this type of insurance, and except for in NSW, you pay for it as part of your registration. CTP pays for compensation for anyone who is hurt or killed in a car accident. It costs several hundred dollars.
• Comprehensive: You don’t have to have this insurance but it’s a good idea. It helps pay for damage to your car and the other person’s car if you get in an accident, if your car is deliberately damaged by someone, if it is stolen, or if it gets damaged in a storm. The price of comprehensive insurance varies depending on a number of factors, including the value of your car, your age and how likely you are to make a claim. Premiums can also vary between states and territories.
• Third party property damage: This insurance gives you less coverage than comprehensive and is usually cheaper. If you cause an accident that damages someone else’s (called ‘third party’) car or other property, it covers the damage but it does not cover the damage that is done to your car.
• Third party property damage, fire and theft: In addition to third party property damage, this insurance covers if your car gets stolen or is damaged by fire.

Only pay for the type of insurance cover you want. And don’t feel pressured into buying insurance from a car dealer. Search online and you’ll find different options for every type of insurance, including comparison websites. Shopping around can save you lot of money.

Taxes

When you buy cars and houses, you have to pay a ‘stamp duty’ tax (otherwise known as ‘conveyance duties’). How much you pay depends on how much you paid for the car or house.

When it comes to cars, stamp duty is different in each Australian state or territory. Usually, it is a percentage of the price or value of the car.

When you’re saving to buy a car, make sure you include stamp duty in your savings goal so you have enough money set aside.

There are usually transfer fees to pay at the same time. Once you’ve purchased the car you usually only have 14 days to pay these.

Government websites have calculators to help you work out how much tax you’ll need to pay in your state or territory:

• Australian Capital Territory
• New South Wales
• Northern Territory
• Queensland
• South Australia
• Tasmania
• Victoria
• Western Australia

Registration

When you buy a car, you’ll need to pay to register it before you can drive it. Driving an unregistered car is illegal. Your car must be registered at all times, so you’ll need to keep paying for registration to keep driving.

Registration can cost from several hundred dollars to over a $1000 a year. It depends on the type of car, what state or territory you live in and whether you pay all at once each year or in smaller amounts over a year.

Depending on the age of the car you’ll need to get a roadworthy certificate before it is registered. Usually this involves:

• An inspection by a mechanic. Depending on your state and territory this can cost anywhere from $50-$200.
• Fixing any problems with the car. Mechanical repairs can be costly as you are paying for the mechanic to do the work and for any parts they need to get.

If you’re buying a second-hand car, there may still be some registration on the car. You’ll need to transfer the registration into your name at your state/territory’s motor vehicle registry.

Make sure you factor in these immediate and ongoing costs when you’re considering buying a car.

Maintenance costs

Even the most carefully driven car still needs regular maintenance to keep it running smoothly and to prevent any major expensive fixes in the future.

Make sure you also set aside enough money for regular services by a mechanic and the things you need to keep your car running. Maintenance costs can vary, depending on what type of car you have and what service you get.

• A ‘minor service’ is often done to change the engine oil and filter and inspect things to make sure they’re working correctly. These services will generally cost several hundred dollars.
• ‘Major services’ or services that find things that are broken or wearing out will cost you the price of the mechanic’s work, plus the price of any replacement parts they have to order and install. A major service costs several hundred dollars and extra for any repairs or new parts.
• Tyres need to be replaced before they start losing grip and they can cost several hundred dollars each. If you get a flat tyre, the spare that comes with your car is only designed to be driven on for a short distance so you can get to a mechanic.
• You may also find there’s other smaller costs that can also add up. You’ll need to check your oil and top it up between services if it gets low. If you notice your wiper blades aren’t properly clearing your windscreen when it rains, you’ll need to buy some new ones to keep driving safely.

If you have a new car and something goes wrong, you may be entitled to a remedy, like a refund or free repairs, under the Australian Consumer Law as well as the manufacturer's warranty or any extended warranty you might have.

Fuel, parking and tolls

To keep your car running, you’re going to need to fill it up with fuel (or electricity if you have an electric car).

Fuel is sold by the litre and the price per litre is usually on a big sign at the petrol station and on the display of the bowser (where you fill up). It’s displayed in cents and looks like '154.' ($1.54 cents per litre).

• The average car has about a 45-litre tank and will allow you to drive about 400km on a full tank, depending on how fuel efficient your car is.
• Using the numbers above as an example, a full tank will cost you $69.30.

How often and how far you drive will affect how much petrol you use, and how often you’ll need to fill up. That might be once a month or every 2 weeks.

Make sure you can afford to regularly fill your car up with fuel.

Parking can be one of the most expensive parts of owning a car, especially if you’re using your car every day.

• If your school or job doesn’t offer free parking, then you need to consider paid parking when you’re calculating if you can afford a car.
• Depending on where you are, all-day parking can cost anywhere from $15 to $100! If you don’t pay for parking when the sign says you should, you also run the risk of getting a parking fine. Some places will also tow away your car and you’ll have to pay to get it back.

If you live in New South Wales, Queensland or Victoria, the chances are you’ll end up paying tolls. A toll is a fee you pay to pass through a road, usually a highway. All tolls in Australia are cashless; you can’t pay with cash or card at the toll point. To pay tolls you need an electronic tag or visitor/casual pass.

• Depending on the location and your type of car, toll points can cost anywhere from $1 to $25 to pass through.

If you don’t have an electronic tag or pass, the toll point will photograph your licence plate and send a bill to the address your car is registered to.

Before buying a car consider the costs of:

• where you’ll need to park
• any toll points you might pass through.

Buying second hand

When you buy clothes brand new from stores, you’re often buying what’s in season now, but might look out of date in a month or 2.

Consider whether it’s something you’re likely to wear more than once. If the answer is no, then think about whether you can borrow something similar from a friend, or whether you can get it second hand.

You can buy second-hand clothes online, from local social media groups, vintage stores or op shops. You can get practically new items for a lot less money than if you bought them brand new.

Taking your time

Walking past a store or flicking through an app, something might catch your eye and it’ll be tempting to get it right there and then. But sometimes waiting is smart. If you wait for a sale, and there are many throughout the year, you might end up paying a lot less.

Setting yourself a 24-hour rule before purchases is a great way to avoid making impulse purchases that you might regret later.

Sometimes by waiting even a few hours, you’ll realise that you actually don’t want it or need it anymore, and you’ll be happy you held on to your money for a bigger and better purchase down the track.

Lifestyle creep

As you get older and start to make more money, you might find yourself spending more too. That’s okay if you’re also saving more. But, if you don’t keep a close eye on your spending, it could get out of control.

‘Lifestyle creep’ is when you start adding habits or expenses to your life, that you find difficult to maintain.

Some expenses ‘creep up’ on you without realising, and your lifestyle can start to cost more than you can afford.

Before making a purchase, make sure you can afford the costs of future upkeep or that you’ll be happy to do it just the once for a special occasion.

Doing your research

Sometimes the most expensive option isn't always the best option for you.

Online shopping is a great way to compare prices and find the best deal. Just because you’ve seen it for sale in one place, doesn’t mean it’s not for sale at an even cheaper price somewhere else.

Makeup and beauty products are advertised everywhere, and your favourite influencers will tell you which brands they prefer. Just remember that influencers are paid to promote products, and advertising is designed to encourage you to spend money.

Read reviews of expensive products before you buy them and look at what they’re made from. You might find you can get the same quality product for a lot less money, simply because it doesn’t have a famous brand on it.

In-app purchases

When it comes to apps it’s important to remember that the developers often make their money through advertising, in‑app purchases and subscriptions.

By installing an app, even if it's free, you might still be agreeing to pay money if you’ve signed‑up to a free trial with an ongoing cost or you end up finding you can't enjoy the free version without paying to remove the ads.

Read more about subscriptions and in-app purchases

MTX

While you’re in‑game it’s likely you’ll be asked to pay for virtual things like gear, limited use items, lootboxes or in‑game currency. These purchases are called microtransactions or MTX.

Sometimes these small payments will be necessary to level in a game or properly enjoy it, and they can add up fast. Even loot boxes that offer you the chance to get extra perks are rarely free. Or if they are, chances are you’ll need to spend money to unlock them.

It’s a good idea to do your research before buying a game to see if there will be extra costs. Check out the customer reviews online. You can factor these costs into your budget so you’re not caught by surprise.

Downloadable Content (DLC)

Buying a video game isn’t strictly a one‑time purchase anymore.

Many games, once they’re released, will have lots of expansions, and extra content to go with it – called downloadable content or DLC. Some of these may only become available later or contain “pay to win” advantages that become available later. It may feel like you need to get all the DLC for your favourite game to get full enjoyment from it or complete the game.

Instead of installing all the DLC as soon as it’s released, wait a while and read some of the reviews. This will help you figure out if it's worth it to you. Remember to add it to your savings goal so you’re not left short!

Insurance and refunds

Travel insurance protects you from losing money due to cancelled flights, lost baggage, or getting medical treatment overseas. Depending on where you’re going will determine if it’s necessary. The price of insurance depends on your age, where you’re going and for how long.

You can search online to compare insurance coverage. Make sure you pay attention to what’s covered but just as importantly, what isn’t covered. Those are called ‘exclusions’.

Even if you’re travelling in Australia, you can still lose money if your flight, accommodation or tickets to an event are cancelled. Make sure you read the terms and conditions before you book so you know what your rights are and don’t end up losing your money.

Daily expenses

Depending on where you’re going and what you’re doing, you’ll need to spend money. Food and drinks are often expensive at tourist destinations or events.

Hotels can often charge a lot of money for the snacks and bottled water in the room, and if you use any, you will have to pay for it.

You may want to buy merchandise or gifts for others, and these are often far more expensive than they would be back at home. Set yourself a budget for food, and then see how much you can afford for little extras.

Transport

Big events with hundreds of people attending require a lot of transport to and from.

Some rideshare companies charge surge pricing when there’s higher demand, meaning your trip to the event may have only cost $20 but it could be 2-3 times that when you’re ready to leave.

Staying safe means not relying on others or people you don’t know for lifts, so make sure you have enough money to pay for taxis or rideshares before you head out. Or consider taking public transport where available.

Plan ahead

Christmas is the same time every year, but it seems to sneak up on us! A smart way to prepare for Christmas is to buy presents throughout the year so you don’t have to rush and deal with the crowds in December.

We also know the same types of sales happen all year long. Spring sales, end of financial year sales, Easter sales, Black Friday, Cyber Monday, Boxing Day.

Plan ahead and write a list of all the presents you’re going to buy over the year and set yourself a budget. This way you can time your present buying for when it’s on sale and save some extra money. It will also avoid you having to rush to buy something at the last minute.

DIY

Sometimes it might feel like the more you spend, the better the gift. Depending on who it is, it can often be the thought you put into it is what really counts.

Homemade presents, whether craft or cooking, can make a great present for someone and save you money too! Or doing chores or errands for the person so they can relax on their big day. Showing that you care through your time and effort is really appreciated by most people, and it costs you nothing!

Share the cost

If the thing that someone wants is very expensive and you really want to get it for them, you may worry about how much money you’ll have to spend on your own.

Talk to friends or family about sharing the cost, so that the person gets what they really want, and everyone contributes. Don’t forget to all sign the card!