The Cost of Owning a Car in Australia: Expenses to Budget For
Deciding to buy a car is not only about the purchase price — the annual running costs can be substantial and have a big impact on the household budget. This article brings together the main cost groups you need to account for when considering owning a car in Australia.
The main cost groups
1. Registration (Rego)
All cars on the road in Australia must have annual registration. The registration fee varies by state and vehicle type — it includes the basic registration fee plus the CTP insurance premium (see below). Check the website of your state registration authority for the specific fee for your vehicle type and address.
2. CTP insurance (Compulsory Third Party)
CTP (or “green slip” in NSW) is compulsory insurance, usually paid together with your registration. CTP covers your liability if you injure another person in an accident — it does not cover damage to vehicles. The CTP premium varies by state and vehicle type.
3. Car insurance (optional but important)
Beyond compulsory CTP, there are three common types of optional car insurance:
- Comprehensive: covers damage to your car and other people’s cars, including when you cause the accident. The most expensive premium but the most complete protection.
- Third party fire and theft: covers other people’s cars if you cause an accident, plus protection if your car is stolen or catches fire. It does not cover damage to your own car in an ordinary accident.
- Third party property only: only covers damage to other people’s cars if you cause an accident.
The premium depends on many factors: the car’s age, the car type, your address, your driving history, and the excess you choose.
4. Fuel
Fuel costs depend on the car type (a small or large engine), how far you drive each week, and the current fuel price. Fuel prices in Australia fluctuate week to week and vary between cities — they are usually cheaper mid-week and more expensive on weekends in many major cities. Diesel and hybrid/electric cars have different fuel costs from a conventional petrol car.
5. Regular servicing
Every car has a servicing schedule recommended by the manufacturer — usually by kilometres or time (for example, every 6 months or 10,000 km). A regular service includes an oil change, filters, and an overall check. Skipping servicing can lead to serious breakdowns and cost much more in the long run.
6. Repairs and replacement parts
Tyres need replacing periodically depending on how you drive and the road quality. Brake pads, the battery, and other parts also have a limited lifespan. Older cars usually have higher repair costs than new ones. It is wise to set aside a fund for car repairs.
7. Parking and tolls (if applicable)
In the major cities, daily parking fees can be substantial if you drive into the centre. Some motorways and tunnels in Australia charge tolls — these can be paid automatically through an e-tag account or a temporary account. Build these costs into your budget if you regularly travel on tolled routes.
The real total cost
The total cost of running a car depends heavily on the car type, the state, the distance you travel each year, and your driving history. Moneysmart.gov.au has a car-cost calculator to help you estimate the real cost for your specific situation — it is worth using before you decide to buy.
Comparing with the cost of public transport
Before buying a car, compare the total annual running cost of a car with the cost of using public transport (trains, buses, bikes, and Uber when needed). In many urban areas, public transport combined with ride-hailing can be significantly cheaper than owning and running your own car — especially if you don’t need a car every day.
Next steps
For a guide to inspecting and assessing a used car before you buy, see the related guide on buying a used car in Australia.
If you are considering going without a car and using public transport, see the related overview of public transport in Australia.
To fit car costs into your overall financial plan, see the related guide on the cost of living in Australia and how to budget.