Buying a car

2 min read

Owning a set of wheels is a life changing event. With your own car, you’ll be free to pick and choose your own travel itinerary.

Saving for a car

Saving for a car is a short-term savings goal, and one way to save for these goals is by drawing up a budget.

  • Fees and charges – There’s more to buying a car than the sale price. Add up additional costs such as stamp duty, registration fees, insurance, running costs such as the costs of petrol and ongoing maintenance.

Your budget can help you understand what money is going into your account/s and what goes out the other side in spending. It also shows if you are spending more than you can afford. This way you can direct your money to where it matters most, so you can stay on top of your bills and start putting money towards your new set of wheels.

If you’re not sure how to write a budget, check out Westpac’s Online Budget Planner for some guidance.

If it turns out you need to trim some expenditure, you may consider cutting out non-essential items such as entertainment, dining out, memberships or subscriptions. It is often easier to stay on top of your spending if you use cash, EFTPOS or a debit card when shopping instead of using a credit card.

Add up the costs of running a car

According to motoring group RAC, a ‘micro’ car such as a Suzuki Celerio hatchback costs around $102.02 in weekly running costs – that’s $5,201.09 annually. If you drive a bigger SUV such as a Ford Territory, you could be paying as much as $228.67 each week or about $11,890 annually1.

The biggest running cost for cars is depreciation. It can cause a significant drop in the value of your car when trade-in time arrives, and it can represent as much as 40% to 50% of the total running cost of your vehicle2.

Fuel and car loan interest are other major costs. There are also other costs such as tyres, registration, servicing and maintenance costs to consider and insurance costs, which can be higher than expected.

Insuring your car – what to consider?

As with any financial product, car insurance depends on your personal needs and circumstances. The best policy for you is the one tailored to your needs, driving lifestyle and budget.

There are a number of different types of car insurance policies you’ll need to tick off such as ‘Comprehensive Cover’, Third Party Property and ‘Compulsory Third Party’ (Greenslip).

Comprehensive Cover

This is generally the highest level of insurance cover for cars. It may include covers such as accidental loss or damage, loss or damage caused by fire or theft and malicious damage.3

Third Party Property

This covers the insured vehicle for damage caused to other cars and property. Third party property cover is generally less expensive than comprehensive cover...3

Compulsory Third Party (‘CTP’) Insurance

CTP insurance is personal injury insurance that is mandatory for every motor vehicle registered in Australia, though each state and territory within Australia have their own rules relating to this type of cover. Generally, it covers vehicle owners and drivers who are legally liable for personal injury caused to any other party in the event of a motor vehicle accident. It will cover you for personal injury claims made against you by other road users such as drivers, passengers, pedestrians, cyclists, motorcyclists and pillion passengers involved in an accident.3

New versus used

There are no hard and fast rules as to whether you should buy a new or used car. It comes down to personal preferences, needs and budget.

Cars depreciate (lose their value) most rapidly in the first couple of years on the road, so you can expect to spend less money by buying a relatively late model used car compared with a brand new one.

Most new cars come with a full manufacturer’s warranty for several years, which gives you some cover should you run into problems with the vehicle. On the flipside, with a used car, depending on its age and the number of kilometers it’s clocked up, it might be in need of maintenance, and this could end up costing you money.

Getting a vehicle inspection

It pays to know you’re not buying a lemon, and this is where a vehicle condition appraisal could be worth considering before buying a used car.

Most of the major motoring bodies such as the NRMA (NSW and ACT), RACV (Victoria), RACQ (Queensland), RAA (South Australia), RAC (WA), RACT (Tasmania) and AANT (Northern Territory) offer this service. You may be eligible to receive a full report on the car’s general condition and safety components from a qualified mechanic.

Need help towards saving for your own set of wheels? Contact us to arrange to speak to a BT Adviser
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1Costs are associated with operating a car in Western Australia, including depreciation. Costs are calculated for a 5-year period from new, and based on driving 15,000 kms per year on private use. The RAC 2015 vehicle running costs guide -

2The RAC 2015 vehicle running costs guide -

3ASIC’s MoneySmart website – Car Insurance -

This information is current as at 15/08/2016.

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.

This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

This Information may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be accurate at its issue date. It should not be considered a comprehensive statement on any matter nor relied upon as such. While such material is published with necessary permission, no company in the Westpac Group accepts responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material.

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