Drive away pricing vs. on road costs

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on June 9th, 2023       

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Once you have accomplished purchasing your dream car, especially be it the case you are a first time buyer, you normally don’t expect having to pay for anything else, except for fuel and maybe some additional products your car utterly requires for its proper functioning. Is that right?

Therefore, you are most likely to stumble across advertising slogans such as “drive away pricing” or “road costs”. What this phrase indicates is that buying a car implies additional costs as well.

Consequently, what are the real costs buying a new car actually implies for a fact? And what do drive-away deals genuinely mean? Keep on reading in order to get acquainted with useful information with regard to the matter. Being informed is always the best choice.

Stamp duty

The value of the stamp duty varies depending on state and territory. This range of price might add hundreds of dollars to the initial price of the car. Moreover, stamp duty is normally collected by the dealer. Nonetheless, that depends on the state as well. Stamp duty is established based on your car’s price and how it’s rated by the federal government’s green vehicle guide. Cars are divided into four main categories: A, B, C and D. Class A encompasses the less polluting cars, while class D includes the most polluting vehicles.

Third party insurance

This is the most important and the highest cost a person has to pay in order to be able to register their car. The price can go up to $700 per year. A dealer, however, might be able to get insurance at a more profitable price, so their much displayed generosity might not be as enticing as it may seem. This aspect is valid for dealer demonstrators. They are the ones registered to the business, and they have the ability to get lower rates starting from $300, for instance.

Dealer delivery fees

If other types of taxes appeared to be rather complicated, this one most certainly comes down to margin. This is what car dealers operate on in order to get their money.

The prices for mass-market produced cars are quite competitive, making dealer margins for new vehicles smaller than dealer margins for already used cars.

This is the point where the car dealer enters the stage and throws in a fee that is meant to cover the costs of taking the car from the assembly, cleaning it and then getting it ready to be delivered to customers.

Regardless of the brand of the car, this tax varies from $1500 to $8000 for new vehicles.

Luxury car tax

In Australia, this tax has been introduced about 15 years ago. It is unquestionably expensive and every car company wishes to point that out.

In more specific terms, the luxury car tax charges a car’s owner with about 33% on every dollar of the price of a car that exceeds the amount of $63,184. This explains why in Australia high-end cars are considerably more expensive than in other parts of the world.

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