The true cost of owning a car in Australia
Most Australians think about car costs in terms of the loan repayment — but that's just one slice of a much larger picture. The real cost of car ownership includes fuel, insurance, registration, servicing, tyres, and — the biggest one most people overlook — depreciation. When you add it all up, a typical Australian car owner spends between $8,000 and $14,000 per year to own and operate a vehicle.
| Cost category | Low | Typical | High |
|---|---|---|---|
| Loan repayment | $0 | $4,800 | $9,600 |
| Depreciation | $1,500 | $3,000 | $8,000 |
| Fuel (15,000 km) | $1,800 | $2,500 | $3,500 |
| Insurance | $800 | $1,600 | $3,000 |
| Registration + CTP | $400 | $900 | $1,400 |
| Servicing | $300 | $700 | $1,500 |
| Tyres | $150 | $350 | $700 |
| Other (tolls, etc.) | $0 | $500 | $2,000 |
Annual estimates for a typical Australian passenger vehicle, 2026.
Depreciation: the hidden giant
Depreciation is the decline in your car's market value over time, and it's the cost most Australians completely ignore when budgeting for a vehicle. A new car loses roughly 15–20% of its value in the first year alone, and around 50% over five years. If you buy a $40,000 car and sell it for $20,000 five years later, that $20,000 difference is your real economic loss — more than $4,000 per year before you've spent a cent on fuel or insurance.
The practical implication: a two-to-three year old used vehicle of the same model will always be cheaper to own over your holding period than buying new, because the steepest depreciation has already been absorbed by the first owner.
New vs used: where the maths gets interesting
At current car loan rates of around 7–9% p.a., the difference in total cost between buying a new $40,000 car and a comparable two-year-old model at $28,000 is significant. The new car costs more not just in loan repayments, but in insurance premiums, stamp duty, and especially depreciation in the first few years. Over a 5-year ownership period, the used car advantage can easily amount to $10,000–$15,000 in total cost.
EVs and hybrids: are they cheaper to run?
Electric vehicles eliminate fuel costs entirely and have significantly lower servicing costs due to fewer moving parts — no oil changes, fewer brake replacements (thanks to regenerative braking), and simpler drivetrains. A typical EV costs around 2–4 cents per kilometre to charge at home versus 12–18 cents per kilometre for a petrol car. The trade-off is a higher purchase price, though government incentives, reduced stamp duty, and FBT exemptions for EVs used as novated leases have significantly narrowed the affordability gap for many Australians.