The hidden costs of car ownership

Purchasing a car is one thing, but affording to run it can be a whole different kettle of fish. Here are some things to consider

Budgeting for a new car is one thing, but often forgot is the slew of ancillary costs that also come along with it. Of course we know these exist, but depending on which car you’re shopping for, prices of insurance, servicing and petrol, for example, could blow out your finely tuned budget.

This is especially evident when you’re shopping in a new segment, like moving from a hatchback to an SUV. Consumables will become more expensive, it’ll be more expensive to fill up at the petrol station and servicing can also be dearer. That’s before we even discuss the real killer, depreciation.

So before you get to the dealership, or even once you do, begin the research into how much extra you’ll be paying over the course of your new car ownership.


They only need to be replaced every few years, but once the time does come to swap boots it can come at great cost. SUVs generally use larger tyres than sedans and hatchbacks, and performance focused cars use better rubber than passenger cars – so costs can vary by a large degree.

They’re often one of the lesser discussed aspects of running a car, but on a per-year basis tyres can easily match yearly service prices, sometimes costing well over $1000 to have the lot replaced.


Conversely, this is a cost that’ll be constantly front-of-mind during car ownership. Whether it’s petrol, LPG, diesel, electric, hybrid, hydrogen or other – all fuel costs money. Every car burns fuel at a different rate so pay close attention to the claimed fuel economy and cross-check it with online reviews to see whether the claim stacks up in real life.

The size of car and type of engine will go a long way in determining how much fuel your car uses, and be mindful that where and when you drive your car will impact the fuel bill too.


The silent killer of your automotive investment, depreciation is a cost that you can’t see until you go to sell your car further down the track and find that it’s lost more than 50 per cent of the value you bought it for.

There’s really nothing you can do to avoid it apart from keeping your car in good nick, and making sure the specification level is such that the next buyer will enjoy it as similarly as you did. That means no velour red interiors!


It goes without saying that this yearly cost is needed for every car on Australian roads. Annoyingly, not much concession is offered for electric vehicles like is offered in other countries too.


Often compulsory (and if you’re skipping it you’re mad), car insurance adds on a hefty charge to your bottom line each year. In general, the more expensive your car is, the more it’ll cost to replace, and therefore the more it’ll cost to insure. But prices tend to jump for younger drivers as well.

You can easily get a quote on a car you intend to buy before committing to the deal so make sure you do your homework before signing up for insurance coverage. And shop around – you’ll likely find a better deal the longer you look.


Luckily, manufacturers are trying to bring down the ongoing cost of maintenance and servicing. But even still, it’s yet another yearly cost (sometimes more often) that you’ll have to absorb to keep your car in tip-top shape. Dealerships are moving toward service packages that let you know how much you’ll be spending over the long run. And in some cases you can even pre-purchase when buying the car.

Need help in deciding which car should you be shopping for, prices of insurance, servicing and petrol? Get in touch with us at (08) 8231 4709 or send us an email at

Article reproduced from WhichCar by Tom Fraser

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Zac Zacharia (Managing Director) has been assisting clients to create wealth and secure their futures for over 14 years.

He is also an accomplished presenter and educator

Co-authoring the popular investment book, Property vs Shares.