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For many of us, a car can be essential. Whether you’re driving it to work or just taking it out to escape on weekends, a car can mean freedom.

But this freedom comes with a cost. Cars can be expensive not just to buy, but also to run. Before you buy a car, it’s important to ensure you’re aware of all the costs that will come with your new wheels.

Upfront costs

Stamp duty is the percentage of the purchase price of any new or used vehicle that must be paid to the relevant state or territory government. Stamp duty varies according to the state you live in – check out the links below for more details and to calculate costs:

Another cost to factor in is Compulsory Third Party (CTP) insurance. This is required by law to cover anyone who may be injured due to the fault of your car’s driver.

Other car insurance policies, such as Comprehensive or Third Party Property, are not compulsory but may end up saving you a lot of money in the long run if you have an accident. See our car insurance options.

If you’re buying a new car, you may have seen or heard about some costs outside of the sale price. Ask the dealer for the total ‘drive away’ or ‘on-road’ price of the car so that you’re not caught off-guard with unexpected fees for things such as number plates, registration or dealer delivery.

Ongoing costs

RACQ estimates that the average cost for running a car* ranges between $116.11 a week for cars classified as ‘micro’, up to $332.82 a week for cars classified as ‘SUV all terrain’. So the type of vehicle you choose will have a big impact on your ongoing costs.

Of these costs, petrol will likely be your biggest expense – so buying a car with economic fuel consumption can save you a lot over time. RACQ found that, on average, cars can range from 5.98 cents per kilometre to 20.46 cents/kilometre. Fuel economy typically relates to vehicle size, but RACQ also found it can vary from car to car within the same size category.

Assuming nothing goes too wrong, the other major cost you’re likely to face is servicing your car. A big perk of buying a new car can be capped price servicing for a significant amount of time, making it easier for you to budget for the future. RACQ’s study included an analysis of the average cost of servicing per kilometre for many cars – check out their findings.

Tackling the price

Saving a bit more money on top of the cost of the car you’re wanting to buy will give you a buffer so that you can afford ongoing costs like fuel and servicing. Check out our tips on how to create and stick to a budget.

If you need the car now and don’t have time to save, a personal loan can help you make the purchase straight away. With CommBank you have a range of personal loans options: a Fixed Rate Personal Loan, a Variable Rate Personal Loan or a Secured Car Loan.

A Secured Car Loan lets you borrow at a lower rate than an unsecured loan by using your new car as security, reducing the amount of interest you have to pay over the course of the loan. Find out more about the difference between each loan.

A novated lease is a way you can finance a new or used car and make your repayments from your pre-tax salary with approval from your employer. It can also bundle your vehicle’s expenses into one simple payment. Novated leasing is a form of ‘salary sacrificing’, which effectively reduces your taxable income.

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Things you should know

* RACQ, Private vehicle expenses 2017, all costs used in these calculations were current as at 4 April 2017, unless otherwise noted http://www.racq.com.au/cars-and-driving/cars/owning-and-maintaining-a-car/car-running-costs

The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. The CBA Group does not accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. The CBA Group does not accept any liability for losses or damage arising from any reliance on external companies and their products, services and material. Commonwealth Bank of Australia ABN 48 123 123 124.

Car Insurance is provided by CommInsure, a registered business name of Commonwealth Insurance Limited ABN 96 067 524 216 AFSL 235030 (CIL). CIL is a wholly owned non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (The Bank). The Bank does not guarantee the obligations or performance of CIL or the products it offers. Where we refer to 'we', 'us' and 'our', we mean CIL. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this, consider the appropriateness to your circumstances.

A Product Disclosure Statement is available at all Commonwealth Bank branches, by downloading them from commbank.com.au or by calling 13 2423 and should be considered before making any decisions about this product. You should also read the Car Insurance PDS, Financial Services Guide and Privacy Policy which are also available by calling 13 2423. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.