Vehicle Running Costs

What are Vehicle Running Costs?

Are you purchasing a car soon? If so, it is important to consider the running costs of the vehicle you are buying. Here are some important factors to consider.

What are vehicle running costs?

When making a car purchase, most people think about the cost of the vehicle as being the sticker shown on the windscreen with little regard for anything else. The fact is that the price tag of a vehicle is just one (albeit large) portion of what it costs to own it. For one thing, you will need to keep fuel in the tank. For another, there are financial factors such as taxes and insurance.

To help you assess the true running costs for a vehicle, here is a list of things to keep in mind during the car-buying process. 
What are vehicle running costs?


Electric cars have made their way back into the new-car market, but the majority of vehicles you can buy still run on either petrol or diesel. While fuel may seem like a small cost from week to week, it can actually become a significant annual expenditure depending on the vehicle you buy. Over time, small differences in fuel economy can add up to big bucks – sometimes hundreds or thousands of dollars – a year.

Purchasing a fuel-efficient vehicle can do wonders for your financial budget. Vehicles that are thirsty at the bowser will reduce the amount of money you have for spending on other important ownership aspects such as repairs or upgraded insurance. High-performance cars or big SUVs typically consume a lot of fuel, though they can still vary greatly between models – so be sure to compare fuel consumption figures.


Every state and territory of Australia legally requires vehicle owners to have a compulsory third party (or CTP) insurance policy. This coverage provides the bare minimum for injury costs if you get in an accident and injure someone. It does not cover damage to their property which you could be held liable for.

Other types of insurance include:

Third party property only - pays for any damage you cause to another vehicle or other property if you get in an accident.

Fire and theft - covers your own vehicle. In the event that your car catches fire or gets stolen, the insurer will provide a replacement.

Comprehensive - covers any sort of natural damage such as storms or falling branches. Also covers damage to your vehicle after a collision.

Other than CTP, insurance policies are optional. However, if you have invested in a new or valuable car, insurance may be cheaper than having to pay for any damage you incur from car accidents or natural disasters.
Maintenance and Repair
Maintenance & Repair

Every vehicle requires regular maintenance at some stage and with varying frequency, including:

• Oil changes

• Fluid checks

• Tyre rotation

• Tune-ups

• Timing belt adjustments

• Routine inspections

Ignoring these tasks could result in damage, costing you more money in the long run.

In addition to these regular maintenance obligations, vehicles can incur trouble through their lifespan. New vehicles usually require fewer repairs, and this is definitely a factor to consider depending on your budget and personal vehicle desires.

Financial Costs
Financial Costs

Other than insurance, there are both one-time and yearly costs associated with your vehicle.

• Registration – You must pay a small fee to have your vehicle registered.

• Stamp duty – A one-time charge upon purchasing a vehicle or transferring one to a new owner.

• Vehicle tax – A yearly tax that is part of your annual tax statement.

• Other taxes – Australia imposes other occasional taxes, such as a luxury car tax that is charged for vehicles over $63,189 in value (as at 2015/2016 financial year).

• Depreciation – An “invisible” cost. Virtually every car depreciates in value according to time and mileage. High-end luxury cars and large trucks typically depreciate the most. This cost does not come out of your pocket, but when reselling the vehicle you will almost never sell the car for the same price you paid.

Incidental Costs
Incidental Costs

These are costs that not everyone pays, but people without cars definitely do not have to worry about:

• Storing your car

• Registering for parking spaces

• Buying aftermarket accessories

• Protecting your vehicle from theft

• Having your car cleaned

Take all of these categorical costs into account when preparing to buy a car. The sticker price only holds a portion of what you will have to end up paying for the accumulating running costs. Always save up for emergencies and buy as much insurance as you can afford for vehicles with significant value.

By taking these precautions and having the money for regular service and repairs, you will be able to get the most out of your investment and enjoy the fun part of your car-buying journey.