Home Dollars & Sense What Are The Hidden Costs of Buying a Car?

What Are The Hidden Costs of Buying a Car?

By carbar on the October 13, 2022

8 minutes

It’s a mistake even seasoned car buyers make – they spot a great deal at the showroom or online and rush to snap it up. Not...

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It’s a mistake even seasoned car buyers make – they spot a great deal at the showroom or online and rush to snap it up.

Not so fast.

The thought of getting behind the wheel of a new car is enough to get anyone excited, but that’s no reason to make what could be a serious financial error.

Unfortunately, that great deal you’ve spotted on the sticker isn’t the whole story – every car purchase comes with hidden costs that you need to be aware of when you’re in the market. 

To help you make a more informed choice, carbar has rounded up some of the most significant hidden costs of buying a car. If you’re wondering which car to buy and price is a factor, read on.

Price of the car

The price of the car will vary depending on whether you buy from a dealership or private seller.

When buying a new car from a dealer, the total cost of the car may include all the costs that the dealership incurred to prepare and sell the car itself (sometimes referred to as dealer fees). There may even be paperwork fees, all of which can be negotiated before signing the dotted line.

While you will be getting a new car, which may result in lower costs for maintenance and servicing, you will need to find out if there are additional costs such as dealer delivery.

According to Drive1, the fee for dealer delivery should be no more than $300 to $500 for a new car, yet many car buyers are finding a much higher amount on their quote. Why? Simply because the demand is high and the supply is low. Waiting times are longer than ever, so excess delivery charges have become the norm.

Currently, there is no regulation in the industry for these charges, so it’s important to read through every additional cost that comes along with purchasing a car and ensure you are aware of any fees prior to committing to your purchase.

If you choose a private sale, it’s important to remember that you are buying someone else’s property. So while the car may look like it's in great condition, there may be some sneaky surprises and ongoing costs to consider. Not all private seller’s choose to invest in car detailing either, so this may be another cost you need to think about post-purchase.


Unless you have a true collector’s item, your car is less valuable every year thanks to depreciation.

Depreciation is often referred to as the difference between the value of the car at the time of purchase and the value of the car when you choose to sell it.

The single largest contributor to your car’s running costs, depreciation makes up more than 40% of your after-purchase expenses2. With some cars losing as much as 17% of their value every year3 for the first three years, that new Corolla you have your eyes on could hypothetically shed more than $10,000 in value over just 36 months of regular usage, leaving you with a big gap to make up if you’re looking to trade up.

If you are considering buying an EV, it is unknown at this stage how much it could depreciate over time, however in the next 3-4 years it should be a bit clearer. In saying that, there is some positive news for EV owners. According to Canstar4, the Tesla Model 3 is estimated to retain a whopping 79-82% value over three years, which is huge!

Loan interest 

Unless you’re paying for your car upfront and in full, you’ll be taking out a loan, which means interest will accrue.

While not an immediate cost that you have to worry about, interest will significantly drive up the cost of a vehicle over its lifetime.

Take for instance that new Corolla from earlier – if you took out a three-year loan for the entire purchasing price of $23,500 at a standard 8% per annum interest rate, you could end up paying more than $31,000 after interest, balloon payment and application fees. That’s nearly $8,000, or 34% more than you originally thought you were up for.

And when it comes to loans, don’t forget the fine print and extra costs associated with your loan.

Some banks may require you to pay a loan establishment fee along with monthly fees throughout the loan term. And, if you are using the new car as security for the loan, you will have to purchase comprehensive car insurance for the new vehicle before they hand over the cheque.

Stamp duty - Government fees and charges

Every state and territory in Australia levies a tax whenever a vehicle changes ownership.

Called stamp duty, this tax applies whether the car was purchased new from the dealership or used from a previous owner.

Unlike GST, this tax won’t be included in the sticker price of the vehicle, often becoming a nasty surprise for any buyer who hasn’t made a conscious effort to factor it into their budgeting.

Complicating matters is that each state and territory calculates stamp duty differently5. Many jurisdictions – such as New South Wales – calculate the stamp duty payable purely on the purchase price of the car. Others such as Queensland vary stamp duty depending on the design of the engine, or the amount of CO2 the car emits as in the Australian Capital Territory. These varying stamp duty amounts can impact your choice of which car to buy, sometimes encouraging drivers to choose smaller, less expensive, less powerful or less polluting vehicles.

The result is that the final price you pay for a car can vary wildly.

That modestly priced Toyota Corolla you were looking at could end up costing you significantly more than its original $23,500 sticker price – up to $1000 more in some jurisdictions or as little as $240 in others.

Keep this in mind when you start shopping around.

And for those of you shopping around for a fancier type of car, you should consider luxury vehicle tax also. Often those upmarket brands come with their own fees to consider, so be sure to research the added costs before you buy.

Inspection costs 

Do you know what you’re buying when you go car shopping?

You should.

While strict regulations6 mean that dealers must sell a certified roadworthy vehicle that functions as advertised, you’re not nearly as well protected when you buy through a private sale.

As such, any driver who doesn’t want to pay thousands for a lemon should factor in the cost of a pre-sale inspection into their budget.

These inspections aren’t expensive and can be done by your local mechanic, saving you money by helping you to avoid cars requiring huge repair bills.

While only costing on average a few hundred dollars, they are an expense that must be factored into the total cost of acquiring the car. 

And don't forget

There are also other costs involved in the initial purchase of a car that are often overlooked. Once you have purchased a car, there are a few other considerations before purchasing a car including:


Hopefully you won’t have any hidden maintenance costs, but it’s worth putting money aside just in case.

If you buy a brand new car, it will just be one of your ongoing costs. But if you buy a used car, it may be something to be aware of sooner.

Hopefully, your car will have been recently maintained, however you may still want to check the oil, tyres, windscreen wipers and battery. Often some of these things can be overlooked by the previous owners.

Due to fewer moving parts, an EV will generally be a lot more affordable long-term when it comes to maintenance. With substantially cheaper servicing costs, you will mostly need to worry about the maintenance of the battery, brakes and tyres.

The difference between the maintenance costs for new or used EVs will come down to who you bought it from and how well it was looked after. Just like your regular car, you can check the logbook and manufacturers warranty for peace of mind.


Your new car may come with a full tank of fuel (hopefully), but it is also one of the earliest costs you will need to be familarised with.

Ensure you budget for your first fuel tank as part of your upfront costs.

And of course, if you bought an EV, you won’t have to worry about fuel at all. Eventually, the savings may outweigh the higher cost of the purchase, making it a sound financial investment for your future.


Although registration will be one of your ongoing costs, when buying a car, it is still important to determine whether there will be any registration fees upfront.

You will need to organise a registration transfer and possibly even a registration renewal if you are buying from a private seller.


At a minimum, your new ride will need compulsory third party insurance, but if you have purchased a new car, you will most likely be considering comprehensive car insurance.

As mentioned above, if you are taking out a personal loan for a new car, and using it as security for the loan, you will have to take out comprehensive insurance before you are given the green light.

Insurance costs will be worth noting in your budget, and will vary from car to car, factoring in its age, mileage and body type.

Always read the product disclosure statement to check what is included in your policy.

Roadside assistance

Something you may want to include in your upfront investment is roadside assistance to help you with any breakdowns or issues you have with your new ride.

Your new insurance policy may include it, but it's important to double-check before you leave the dealership.

Avoid hidden costs altogether

Looking for a way to get behind the wheel of something special without the financial and maintenance risks? A carbar car subscription makes it simple.

For a single fixed weekly payment, you can drive what you want, where you want while they take care of all the ongoings. Your subscription includes everything from insurance to registration and servicing, even covering things like tyres and roadside assist.

To learn more about car subscription, browse our range of vehicles or join for free, visit carbar.com.au today.

1 https://www.drive.com.au/news/new-car-buyers-share-prices-on-facebook-amid-record-rise-in-rrps-and-dealer-delivery-fees/
2 https://www.racv.com.au/royalauto/moving/news-information/car-running-costs.html
3 https://www.racv.com.au/royalauto/moving/news-information/car-running-costs.html
4 https://www.canstar.com.au/car-insurance/car-depreciation-rates/
5 https://www.carsguide.com.au/car-advice/stamp-duty-for-cars-explained-31021
6 https://www.consumer.vic.gov.au/licensing-and-registration/motor-car-traders/running-your-business/obligations-used-car-sales

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