Beyond the purchase price

Are you looking to buy a used car? Many advertisements and classifieds list vehicles at rock bottom prices, but if you think that’s all you’ll be paying for your car – think again. Getting a car title transferred into your name involves a bit more than just paying for the scrap of metal. Here are some additional costs to consider beyond the purchase price:

• Registration – every vehicle needs to be registered before it can be on the road – it is illegal to drive an unregistered vehicle and those who take this risk, face substantial fines. Registration costs vary state to state and depend on the weight, class of the vehicle and how the car will be used. For example, registering a light private vehicle in NSW (under 1 tonne) costs $232. Vehicles that have already been registered by the previous owner will need the title transferred to the new owner – in NSW this cost is just around $30.
• Stamp Duty – stamp duty is charged by the government on the sale of all vehicles worth over $10,000. The exact amount due will depend on the vehicle and state it’s being sold in.
• Insurance – all vehicle owners must have compulsory third party (CTP) insurance that insures the driver of the vehicle from third party personal injury in the case of an accident. Insurance quotes are available from major insurers and will depend not only on the type of vehicle you drive, but also where the car is registered, who the drivers will be and how the car is garaged.

In addition to CTP, you’ll also want to consider additional insurance that will insure the vehicle itself from any damage. Comprehensive car insurance will cover you for the costs of repairs for any damage done to the vehicle in case of an accident. Meanwhile, you can also take out an insurance plan that will cover you for fire, theft or for any done damage to third party property.

1. Car history check – when buying a used vehicle, a car history check reassures the purchaser that the vehicle is clear of any outstanding finance and that the seller is being upfront about the vehicle’s history. Some sellers may try and hide certain aspects of a car’s accident record or avoid warning the buyer that the vehicle has suffered water damage. From a recent Carhsitory.com.au consumer survey it revealed that 85% of private sellers said they did not advise the potential buyer that the car had been in an accident. A car history report costs around $30 and reveals invaluable information about your potential vehicle purchase. You can also order an official REVs or PPSR certificate that guarantees the car title does not have any finance secured against it.
2. Finance costs - if you do choose to finance your vehicle, there will be some additional costs involved. Outside of the interest that you’ll be paying for the financing, lenders may also charge a fee for taking out a loan. Be aware of additional penalties and charges that you may incur from late payments or defaults.

So what does this all add up to?

As an example, let’s consider a private purchase for a 2000 Holden Commodore that is listed as $5200. Assuming that you have a good driving history (no demerit points), will be the only vehicle operator and live in the Metropolitan NSW area – here are the costs you could incur:

Registration transfer (NSW): $28
Stamp duty (charged at 3% of $5200): $156
Lowest CTP (as quoted by GreenSlip guide*): $472.42 for 12 months of coverage
Car History Check: $30
No financing taken.

Total costs incurred from purchase (including purchase of the car): $5886.42

*parameters entered on GreenSlip site:
Commencement Date: 05/09/2010
Privately owned Motor car, 2000 model
Vehicle normally garaged in 2060 (Metropolitan Region)
Registered for private use
Current CTP policy with NRMA
No current comprehensive or third party insurance
Owner aged 37 years
0 licence demerit points
Youngest driver aged 37 years
No driver with at-fault accident in the last 2 years
NRMA Roadside Assistance membership