On Road Costs Explained

There's nothing worse than saving up for something, only to discover there's a heap of unexpected costs that leave you out of pocket. Booking a hire car is a perfect example... would you like insurance with that? It stings. And anyone who has ever looked into buying a car will be familiar with the ‘plus on roads' tagline. It also stings. To avoid this, do your numbers on the total cost of the car on the road - not just off the showroom floor.

Standard on-road costs are outlined below:

Dealer Delivery Charges. An unavoidable, yet variable cost. This is the money you dish out in order for safe delivery of your car - clean, and to the specification you ordered.

Registration. It is a legal requirement that all vehicles are registered in the State in which you reside. This cost varies depending on the State, type of vehicle and type of owner (eg business, private).

Compulsory Third Party  or CTP Green Slip. This insurance covers you against any claims made by a third party in the event of an accident. It is a legal requirement in Australia and the costs vary, depending on your insurer. In some states this is included in your registration, in other states you purchase it separately.

Stamp Duty. Payable to the relevant authority, this fee is in direct proportion to the price of your vehicle (inc GST). This cost varies depending on the State in which you reside - and in some cases engine size is also considered. Costs can range from 2% to 11% - and some States use sliding scales based on car price brackets. Do your homework on this one.

Luxury Car Tax (LCT). A more controversial tax, this is payable on vehicles which exceed a particular dollar value threshold - which at present is $57,180. For every dollar over $57,180, you must pay 33% luxury car tax. There are some exceptions, including fuel efficient cars - consuming 7.0 litres per 100km or less - whereby the threshold lifts to $75,000. Many of the larger, efficient diesel cars avoid LCT for this reason.

To avoid upset, the five costs set out above should be factored into your buying budget.

Some other things that aren't strictly ‘on-road' costs, but are really important to keep in mind are:

Comprehensive insurance. This covers more than 3rd party damage and is highly recommended.

Fuel economy. There's no sense in buying a 4-litre V8 if you can't afford to fill it up!

Maintenance. Regular maintenance is key to keeping your car in good running order. Know when your services are required and budget for them.

Tyres. These need changing based on how many kilometers you drive and how you drive. Budget a new set every 12-18 months. Bald tyres are dangerous, so don't skimp. 

Happy shopping.