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On-road costs: The extra sting when buying a new car

Purchase goods in Australia, from a takeaway coffee through to a television, and the advertised is what you will pay.

That’s because the law states that retailers must include the cost of the goods and services tax (GST) in any advertised price.

Car sales are the exception to the rule – and the advertised price does not always cover the final amount you’ll need to pay.

Unfortunately, in many cases you might think you are looking at a real bargain, but  just a few hidden costs can tilt the scales in favour of the dealer.

While car prices include GST and luxury car tax they often leave out several on-road charges.

Many on-road costs, such as stamp duty and luxury car tax, are based on the vehicle’s price — so if you pay less for the car, it also means you will pay less in costs.

Below we uncover each of the hidden costs when buying a car.

Dealer delivery charges

(Average charge is $1500, however it can exceed $2000)

Dealer delivery charges are meant to cover all the things the dealership needs to do before a car can be driven out of the yard.

This includes filling out paperwork, peeling protective tapes off the car, giving it a wash and screwing the number plates on.

But if a dealer or manufacturer advertises a car with a “drive-away price”, this means that the number includes all on-road costs.

Compulsory third-party insurance

(Average price is approximately $400 per year)

As the name implies, compulsory third-party insurance (CTP) is a legal requirement for all registered cars in Australia.

It covers the cost of personal injury or death should your vehicle be deemed to be at fault in an accident.

If you want coverage for yourself or for property damage, separate insurance will need to be bought.

In New South Wales, the ACT and Queensland, CTP must be purchased from a private insurer. In other states, though, CTP is provided by the state and its price is included in a car’s registration fee.

Stamp duty 

(Costs approximately $700 for an average car)

Stamp duty is determined by the value of a car, so if you decide to jump up from, say, an entry-level variant to a mid-tier model, you’ll pay more stamp duty.

Similarly, if you add options to your new vehicle, such as up-sized alloy wheels or a body kit, you’ll also pay more in the way of stamp duty.

Registration

(Costs approximately $600 for an average car)

Registration has to be paid to your state’s motor authority, and means that your new ride will be road legal for the first year.

Thereafter it’s usually a flat annual fee, although there are concessional rates for retirees and other special cases.

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