The hidden costs of buying a car


Buying a car invariably costs more than the purchase price. When calculating how much you can afford to spend, you should consider additional costs, such as:

stamp duty or transfer fees;

registration costs (including compulsory TAC premium, which insures you and others for death or injury if your car is involved in an accident);

a Royal Automobile Club of Victoria (RACV) or Victorian Automobile Chamber of Commerce (VACC) inspection of the car to test its mechanical soundness;

any optional extras you might want;

costs associated with borrowing money to buy the car;

insurance premiums;

fuel, spare parts and repairs; and

RACV membership.

If you need finance to help you buy the car, you should shop around: different lenders offer different kinds of products. Always check the fees and charges payable, plus the interest rate and whether it is fixed or variable.


You do not have to sign with a motor car trader’s onsite (or recommended) lender. The finance offered is often at a high-interest rate compared with bank personal loans. Most forms of insurance offered in relation to finance contracts are optional, and you should only sign up for such insurance if you understand what it will cover you for, and you definitely want it.

For more information on finance contracts and related insurance, see Understanding credit and finance.