Buying a car 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 a 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 a car;
•fuel, spare parts and repairs;
If you need to borrow money to buy a car, you should shop around because different lenders offer different products. Always check the fees and charges payable, plus the interest rate and whether it is fixed or variable.
Many car traders offer finance or recommend a particular lender. You do not have to borrow money from the car trader or their recommended lender. The finance offered by car traders often has a higher interest rate than bank personal loans. Also, 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 covers, and you definitely want it.
For more information on finance contracts and related insurance, see Understanding credit and finance.