The Hidden Costs Of Owning A Car
Anyone who’s owned a car will agree they can cost a pretty penny, and they are getting more and more expensive. The 2022 RACV’s Annual running cost survey revealed that Australia’s cheapest car, the MG3 Core, costs a whopping $734.84 per month to run. That’s more than $8,818 per year!
While there are lots of obvious expenses like the purchase cost and insurance, it’s easy to forget some of the less obvious, hidden costs of owning a car. Whether you’re considering buying a new car or hanging on to a car you currently own, it’s worth taking a few minutes to review how much it will cost over a year. Here’s a breakdown of the hidden costs of a car:
Depreciation
Cars lose value as soon as they leave the dealership, and every kilometre driven lowers the resale price. While cars can be assets if you use them for work, you’ll never sell a car at a profit outside the collector market.
Depreciation is how much you lose on resale. If you buy a car at $30,000 in January, then sell it for $20,000 the following year, you’ve lost $10,000 to depreciation.
Tyres and Maintenance
Humans aren’t good at planning for unexpected events, so we’re often caught out by irregular expenses. A new set of tyres definitely falls into that category. Even yearly services and regular maintenance is often needed earlier than we think.
The cheapest tyres still cost upwards of $380 for a set of four. The cost of maintenance is highly variable, but even new cars can regularly need hundreds of dollars in labour.
Here’s what RACV says you can expect to pay for tyres and maintenance if you drive 15,000km per year:
MG3 Core: $544 per year
Kia Cerato: $561 per year
Toyota RAV4: $449 pear year
Kia Carnival: $858 per year
Finance and Interest
A 2021 Finder analysis found that around 14% of Australians currently have a car loan which translates to 2.7 million Aussies. With an average car loan of $31,738, that’s a whopping amount of car debt.
Those interest payments can really stack up and are easy to overlook when considering how much your car costs.
Fuel
While fuel isn’t a hidden cost, it’s incredibly hard to predict, thanks to how often the price jumps. Especially over the past couple of years! As well as increasing when the global cost of oil is high, the cost of petrol varies week to week.
Many Australian motorists ignore the cost of fuel completely, to avoid the stress that comes with trying to shop around vigilantly. Unfortunately, this means many car owners are spending more on fuel than they realise. Pro tip: avoid fuel costs entirely by using carshare)
Here’s what RACV reckons fuel costs when driving 15,000km a year:
MG3 Core: $2070 per year
Kia Cerato: $2128 per year
Toyota RAV4: $1869 pear year
Kia Carnival: $2769 per year
Registration and Insurance
Just like tyres and maintenance, we all know that rego and insurance is a regular cost, but because it’s a year between payments it can catch us by surprise. To make matters worse, 75% of us don’t shop around for car insurance, missing out on big potential savings.
Other regular costs that stay hidden until they’re suddenly due include license renewals and roadside assistance. Taking everything into account, here’s what RACV estimates it costs each year:
MG3 Core: $1980 per year
Kia Cerato: $2128 per year
Toyota RAV4: $2426 pear year
Kia Carnival: $2769 per year
The real cost of car ownership
All things considered, the cost of car ownership starts at over $8,818 per year for Australia’s cheapest car and goes up from there. It’s a pretty staggering amount, but considering how easy it is to miss the hidden costs of car ownership we’ve mentioned in this article, it’s easy to forget how much car ownership really costs.
Living a car-free life is easier than ever, thanks to car sharing services like GoGet. It’s worth checking out if car share could work for you, considering the thousands of dollars, and the hundreds of hours time and hassle you could save! To help you out, weve crunched the numbers on comparing the cost of ownership to GoGet. If you have a car or second car that you don’t use everyday, we can probably save you some money.
