The Hidden Costs of Car Ownership and How to Prepare
Buying a car - new or used - is a big milestone and one that can bring a real sense of freedom and accomplishment. But while most people budget for the purchase price or loan deposit, it's the ongoing costs that can catch many drivers off guard. These hidden expenses can add up quickly and, if unplanned for, turn an exciting purchase into a source of financial stress.
At AFS, we've been helping Australians navigate the real costs of car ownership for over 30 years. We believe in giving you the full picture, so you're prepared for more than just the purchase price. Here's what to keep in mind when planning for life with your car - and how to budget smartly.
Depreciation: The Silent Cost
One of the biggest but least visible costs of car ownership is depreciation. From the moment you drive a new car off the lot, its value starts to drop—typically by around 20% in the first year alone. Over time, this decline continues, which can leave you with a car worth significantly less than what you paid.
How do you get ahead of this? Buying a near-new or used car is one way to sidestep the steepest part of the depreciation curve. At AFS, we offer financing for both new and used vehicles, so you can choose the option that best suits your budget and future plans.
Insurance: More Than Just a Premium
Car insurance is essential, but its cost can vary greatly depending on your age, driving history, location, and the type of vehicle you drive. Comprehensive insurance offers the most protection—but also tends to be the most expensive.
It pays to shop around. Compare providers, check the coverage levels, and be sure the policy matches your needs. At AFS, we always encourage customers to include insurance in their budgeting from day one—so your loan repayments and insurance costs are manageable together.
Fuel Costs: The Day-to-Day Drain
Whether you’re commuting to work, running errands, or heading off on a road trip, fuel is a regular expense that can fluctuate based on fuel type, driving habits, and even market conditions.
Fuel efficiency matters. Smaller vehicles and hybrids generally cost less to run, while larger or performance vehicles can be more expensive at the pump. We help our customers take these running costs into account before choosing a loan, so there are no surprises after settlement.
Servicing and Repairs: Plan for the Unexpected
Routine servicing, new tyres, oil changes, brake pads—they all come with the territory. And that’s before unexpected repairs come into play, which can happen no matter how new your car is.
A smart move? Set aside a regular amount each month as a maintenance buffer. This helps cover both the expected and the unexpected without putting pressure on your everyday finances. At AFS, we help customers plan beyond the purchase—because car ownership is a long-term journey.
Registration and Other Fees
Registration renewal, road tolls, parking permits, and roadworthy inspections can all chip away at your budget. While they might not seem like major expenses individually, added together they can take a real toll over time.
Make sure these recurring costs are included in your annual car budget. When AFS customers sit down with us, we take them through the full scope of expenses that come with vehicle ownership—not just the loan.
Interest on Car Loan: Understand the Total Cost
When you take out a car loan, you’ll also pay interest over time. And while monthly repayments may feel affordable, it’s worth considering how much interest you’ll pay across the life of the loan.
You can reduce this by opting for a shorter loan term or making additional repayments. At AFS, we offer flexible terms and competitive rates to help you minimise interest and pay off your car on your terms.
How To Stay Ahead
The key to managing the hidden costs of car ownership? Planning. When you’re budgeting for a car, go beyond the sticker price. Factor in ongoing costs—insurance, fuel, maintenance, registration—and set up a separate budget if possible.
At AFS, we help you look at the big picture so you can drive away with confidence. Our team takes the time to talk through your goals and financial situation, then helps you choose a loan structure that works for you, with full transparency on what to expect throughout the life of the loan.
Final thoughts
A car is more than just a one-time purchase—it’s an ongoing financial commitment. But with the right planning, those extra costs don’t have to be a shock. When you understand what to expect, you’re in a better position to make smart decisions and enjoy your car without stress.
At AFS, we’re here to support you through every step—from the first quote to your final repayment. Whether you’re buying your first car or upgrading to something new, we’ll help you prepare for ownership with clear advice, flexible finance, and a fair go.
Thinking of buying a car? Let’s make sure you’re ready for every part of the journey. Talk to AFS today.