The true cost of owning a car in Australia (2025)
The sticker price is just the beginning. This guide breaks down every real cost of car ownership in Australia — depreciation, stamp duty, insurance, fuel, servicing, and financing — so you know what you're actually signing up for.
The full picture — all eight cost categories
Before diving into each category, here's a summary of what a typical $50,000 car costs over 5 years for an average Australian driver (15,000 km/year, financed with a personal loan at 8.99%):
Depreciation
$22,400
Largest single cost
Finance (interest)
$12,100
On $45k personal loan, 5yr
Fuel
$14,200
$2.10/L, 9L/100km, 5yr
Insurance
$9,000
$1,800/yr comprehensive
Stamp Duty (VIC)
$3,000
One-off at purchase
Registration
$4,500
$900/yr incl. CTP
Servicing
$4,000
$800/yr average
Tyres
$3,000
$600/yr average
| Total all costs | ~$72,200 |
|---|---|
| Effective monthly cost | ~$1,203/mo |
| Cost per kilometre | ~$0.96/km |
The number most people focus on
The monthly repayment on a $45,000 personal loan at 8.99% over 5 years is approximately $932/month. That's less than half the true monthly cost of ownership. The repayment figure alone is a deeply misleading basis for a financial decision.
1. Depreciation — the silent killer
Depreciation is the loss in market value of your vehicle over time. It's invisible — you don't write a cheque for it — but it's typically the largest single cost of car ownership, often exceeding fuel costs, finance costs, and running costs combined.
For a new car, depreciation is steepest in the first year — typically 15–25% of the purchase price. A $50,000 car can be worth $38,000–$42,500 after just 12 months, purely from transitioning from "new" to "used." This is sometimes called the "drive-away depreciation hit."
| Year | Typical Rate | Value of $50k car | Value lost that year |
|---|---|---|---|
| New (purchase) | — | $50,000 | — |
| Year 1 | 18% | $41,000 | $9,000 |
| Year 2 | 14% | $35,260 | $5,740 |
| Year 3 | 12% | $31,029 | $4,231 |
| Year 4 | 10% | $27,926 | $3,103 |
| Year 5 | 10% | $25,133 | $2,793 |
Total depreciation over 5 years on this example: approximately $24,867 — almost half the original purchase price. This is why the "true cost" of ownership is so much higher than people expect.
How to reduce depreciation loss
Buy a 2–3 year old car instead of new. The steepest depreciation curve has already run — you buy at the bottom of the first big drop. Popular models with strong resale (Toyota HiLux, Mazda CX-5, Toyota RAV4) depreciate slower than average. Avoid unusual colours and configurations that limit your resale market.
2. On-costs at purchase — stamp duty, LCT, CTP
Before you even drive away, there are mandatory government charges that add to your effective purchase price.
Stamp duty
A state government tax on the vehicle purchase, calculated on the market value. It varies significantly by state — for a $50,000 vehicle, here's what you'd pay:
| State | Stamp Duty on $50k vehicle | Notes |
|---|---|---|
| VIC | $3,000 | 6% above $57k; 3.5% below |
| NSW | $2,500 | 5% above $45k |
| QLD | $1,550 | 3.1% up to $100k |
| WA | $1,637 | Tiered rate structure |
| SA | $2,000 | 4% flat |
| TAS | $1,500 | 3% flat |
| ACT | $1,500 | 3% flat |
| NT | $1,500 | 3% flat |
Luxury Car Tax (LCT)
A federal tax at 33% on vehicles above $80,809 (standard) or $91,661 (fuel-efficient vehicles including EVs), applied to the portion above the threshold divided by 1.1 for GST. On a $100,000 vehicle, LCT adds approximately $5,880. On vehicles under the threshold, LCT doesn't apply.
Compulsory Third Party (CTP) insurance
Required in all states to register a vehicle. The cost varies by state, vehicle type, and insurer. It's typically included in registration in some states (e.g. VIC) or purchased separately (e.g. NSW). Expect $400–$700/year for a standard passenger vehicle.
The Veercal calculator models all of this
The On-Costs tab in the Veercal calculator calculates your exact stamp duty by state, LCT if applicable, and adds these to your effective purchase price across all five finance structures.
3. Finance costs — what interest actually adds up to
If you're borrowing to buy, the interest you pay is a real cost of ownership that doesn't get enough attention. On a $45,000 loan at 8.99% over 5 years, you'll pay approximately $11,800 in interest — on top of the purchase price.
The interest rate matters enormously. The difference between an 8% rate and a 12% rate on the same loan is about $5,800 over 5 years — nearly the same as a year of fuel costs. Always compare comparison rates across at least three lenders before accepting the first offer.
Watch for comparison rate vs advertised rate
The advertised rate doesn't include fees. A loan advertised at 6.99% with a $500 establishment fee and $15/month account fee may have a comparison rate of 8.2%. The comparison rate is the one that matters for comparing products.
4. Fuel or charging
At 15,000 km/year with a 9L/100km car and fuel at $2.10/L, you'll spend approximately $2,835/year on fuel. Over 5 years that's $14,175. For an efficient vehicle at 6L/100km, the same distance costs $1,890/year — a $4,425 difference over 5 years.
For EVs, home charging at 18kWh/100km and a $0.28/kWh rate costs approximately $756/year for the same 15,000 km — a saving of over $2,000/year versus the average petrol car.
Fuel cost tip
Fuel efficiency matters most for high-km drivers. If you drive 30,000+ km/year, a hybrid or EV can save $3,000–$5,000/year in fuel costs alone — often enough to justify a higher purchase price over the ownership period.
5. Insurance
Comprehensive car insurance for a $50,000 vehicle typically runs $1,400–$2,200/year depending on your age, location, driving history, and the vehicle. Premiums are highest for drivers under 25 and in major urban areas. Shopping around annually — not auto-renewing — typically saves $200–$600.
For financed vehicles, comprehensive insurance is usually compulsory under your loan or lease agreement. Gaps in cover can trigger a loan default.
6. Registration
Annual registration costs include the government registration fee, a road trauma levy (in some states), and CTP insurance. Combined, this typically runs $700–$1,200/year for a standard passenger vehicle, with significant variation by state and vehicle type.
7. Servicing and maintenance
Manufacturer-scheduled servicing costs vary widely. A small Japanese SUV might cost $250–$350 per service; a European luxury vehicle can cost $600–$1,200. Budget $600–$1,000/year for an average new car. This increases as the vehicle ages and moves out of warranty.
EVs have meaningfully lower servicing costs — no oil changes, fewer brake replacements (regenerative braking reduces wear), and fewer mechanical failure points. Typical EV servicing runs 40–60% less than an equivalent ICE vehicle.
8. Tyres
A set of quality tyres for a standard vehicle costs $600–$1,400 fitted, depending on size and brand. At 15,000 km/year most tyres last 3–4 years on a balanced rotation. Budget $400–$700/year amortised. SUVs and high-performance vehicles with larger diameter wheels cost more.
Full worked example: $50,000 car over 5 years
| Purchase price | $50,000 |
|---|---|
| Stamp duty (VIC) | $3,000 |
| Interest on $48k loan @ 8.99% / 5yr | $11,800 |
| Depreciation (lost value over 5yr) | $24,867 |
| Fuel (5yr) | $14,175 |
| Insurance (5yr) | $9,000 |
| Registration (5yr) | $4,500 |
| Servicing (5yr) | $4,000 |
| Tyres (5yr) | $3,000 |
| Less: exit sale value | −$25,133 |
| True total cost of ownership | ~$99,209 |
| Effective cost per month | ~$1,653/mo |
How to reduce the true total cost
Knowing where the costs sit tells you where to focus. In order of impact:
- Buy 2–3 years used instead of new. You skip the steepest depreciation cliff — typically saving $8,000–$15,000 on a $50,000 vehicle — while still getting a modern car with remaining warranty.
- Choose a model with strong resale value. Toyota HiLux, RAV4, LandCruiser, Mazda CX-5, and Subaru Forester consistently hold value well. A car that depreciates 35% over 5 years costs materially less to own than one that depreciates 55%.
- Shop your finance rate seriously. Use a broker or comparison site, get 3+ quotes, and compare comparison rates. A 2% rate difference on a $40k loan saves ~$4,500 over 5 years.
- Consider a novated lease if you're a PAYG employee. The pre-tax packaging of finance and running costs can reduce the effective cost by 30–45% depending on your salary. Use the Veercal calculator to model the comparison.
- Don't auto-renew insurance. Shopping annually typically saves $200–$600. Loyalty rarely pays with car insurance.
- Stay current on servicing. Deferred servicing costs more in the long run — worn components accelerate other wear, and out-of-service-record vehicles fetch less at resale.
Common questions
What is the true cost of owning a car in Australia?
The true cost of car ownership in Australia includes much more than the purchase price. Key cost categories are: depreciation (typically the largest single cost), interest on finance, fuel, registration and CTP insurance, comprehensive insurance, servicing and maintenance, tyres, and tolls or parking. For most vehicles, the total annual cost of ownership significantly exceeds what most buyers estimate when they focus only on the monthly repayment.
How much does depreciation affect the cost of owning a car?
Depreciation is typically the largest cost of car ownership, often exceeding the interest cost on finance. A new vehicle can lose 15–25% of its value in the first year alone, and 40–50% over three years depending on the make, model, and market conditions. High-demand vehicles in limited supply depreciate more slowly. Buying a vehicle that is 2–3 years old lets someone else absorb the steepest depreciation curve.
What running costs should I budget for on a car?
Annual running costs vary by vehicle but typically include: fuel ($1,500–$3,500 depending on distance and fuel efficiency), registration ($300–$900 depending on state and vehicle), CTP insurance (included with registration in most states), comprehensive insurance ($800–$2,000), servicing ($400–$1,200), and tyres ($400–$800 averaged annually). Electric vehicles have lower fuel and servicing costs but higher insurance in some cases.
Is it cheaper to buy new or used in Australia?
Buying used is almost always cheaper in total cost of ownership terms because you avoid the steepest period of depreciation, which occurs in the first 1–3 years of a vehicle's life. However, used vehicles typically attract higher finance rates from lenders, may have higher servicing and repair costs, and often carry a shorter manufacturer warranty or none at all. The right answer depends on the specific vehicle, its history, and how you plan to finance it.
General information only — not financial advice. All figures are indicative estimates based on simplified assumptions and are intended to illustrate typical cost ranges only. Actual costs will vary based on your vehicle choice, location, driving habits, insurer, lender, and other factors. Depreciation figures are modelled as a declining-balance curve and do not represent any specific vehicle or market condition. Always consult a licensed financial adviser before making financial decisions. Veercal is a calculation and comparison tool and does not hold an Australian Financial Services Licence.