Opinion
Simple ways to put the brakes on car costs
Dominic Powell
Money EditorReal Money, a free weekly newsletter giving expert tips on how to save, invest and make the most of your money, is sent every Sunday. You’re reading an excerpt − sign up to get the whole newsletter in your inbox.
As a relatively recent car owner and also someone who lives in inner-city Melbourne, I have a love-hate relationship with my little 2007 Renault. I love zipping about on road trips and fitting furniture into its ludicrously capacious boot. I hate shelling out $600 for an entirely new windscreen after getting a crack the size of my thumbnail above the dash. I also hate paying for petrol. And traffic. Maybe it’s more hate than love.
Cars are incredibly expensive to run, but there are a few ways you can drive down your costs.Credit: Aresna Villanueva
Basically, what I’m saying is that love ’em or hate ’em, cars are expensive. This isn’t particularly new or original information, but it’s something I’m sure resonates with any car owners, and may serve as a warning to any prospective buyers.
What’s the problem?
According to the Australian Automobile Association, we spend a whopping $18,000 a year on our cars. The main chunk of this (about $8000) consists of car loan payments, as many people have to get finance to purchase a new vehicle. However, even if you own your car outright you’re still looking at some serious dough.
Fuel costs us about $5000 a year, and regular services and tyre repairs set us back $1600. You can also expect to spend as much as $1500 apiece on registration and insurance, not to mention more for things such as tolls and roadside assist.
To make matters worse, all of these costs come after you’ve already bought the vehicle, which will cost you about $26,000 for a small new car or $40,000 for a larger new car like an SUV. Used cars are cheaper, but thanks to a still-inflated used car market courtesy of the pandemic you can still expect to pay $15,000 to $20,000.
What you can do about it
There are a few ways you can be savvy when it comes to cutting down your car costs:
- Go independent: As we’ve learnt time and time again, loyalty is rarely rewarded in the cutthroat world of money saving. Many of us may be under the impression that you must have your car serviced at an official dealership, but this is a myth according to James Martin, car insurance expert at Finder. “It’s a common misconception you need to get your car serviced at the dealership to maintain the manufacturer’s warranty; you don’t. You could save hundreds by going through an independent provider,” he says. It’s also good practice to shop around on repair quotes: “Compare at least three quotes from different smash repairers if you need to fix any dents and prangs. Ask if they can use second-hand parts.”
- Workin’ at the car wash: Martin also recommends washing your own car, which as a child of the drought feels sacrilegious but is good advice considering a wash can cost anywhere from $15 to $50. He also says it “technically counts as exercise” which might be a bit of a stretch.
- Pump it up: RACV’s general manager of automotive services, Jackie Pedersen, recommends keeping your car tyres pumped to the pressure advised in your owner’s manual. “Looking after your tyres will not only reduce your fuel consumption, it will also extend tyre life and improve handling,” she says.
- Drive less: I know, I know, this is the cop-out answer, but it will always be relevant. Taking public transport or riding a bike will almost always be cheaper than driving, though it’s only really an option for those living in capital cities. The proliferation of affordable electric bikes recently means it’s easier than ever to get around on two wheels without breaking much of a sweat.
- Downsize your car: If you’ve got a car you’re not driving much, or it doesn’t suit your current phase of life, consider selling it and downsizing to something smaller/cheaper, Martin says. Not only will you make a bit of money in the switch, but you’ll save on insurance and fuel.
- Save on petrol and insurance: We’ve covered how to save money on petrol in detail here and cutting your insurance bills here. It’s worth asking your mechanic what sort of petrol your car needs. Plenty of modern cars these days require the more expensive 95/98 type unleaded fuel, but for some, you can get away with using 91, though it’s best to get professional advice. It’s also worthwhile to shop around on your roadside assist deals, as some can cost as little as $7 a month and will save you hundreds in the event of a breakdown.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.