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How to save for a car

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How to save for a car

Buying a car is a mega milestone but there’s a few costs to consider like petrol, insurance and rego. Here, we look at the key expenses and ways to supercharge your savings.

Five main costs of buying and owning a car

  1. The (actual) price tag

    The sticker price is usually the first thing we look at, but it’s not the only cost to think about. Before you swap your hard-earned cash for the keys, check the paperwork for any extra fees like dealer delivery, stamp duty or luxury car tax.

  2. Registration

    Your car will need rego before you can hit the road and the price might change depending on the state you live in. Pay your local car registry a visit (online or IRL) to get an estimate on costs.

  3. Insurance

    There’s a few types to consider before getting behind the wheel:
    • Compulsory third party (or motor accident injuries in the ACT): This covers injuries to yourself and anyone you hit. But it doesn’t cover car or building repair costs.
    • Third party property damage: This one might cover you for any damage you cause to other cars or buildings.
    • Comprehensive: It’s basically an all-in-one insurance. This means you might be covered for any damage to buildings or cars (including yours). Plus, you could be protected if it gets stolen or damaged in a flood, hailstorm etc.

  4. Petrol and power

    Topping up the tank might be your biggest ongoing expense because your car won't run without its juice. Handy apps like FuelCheck and RACV show you the best deals nearby. If you’re zipping around in an electric car, don’t forget you’ll need to pay power costs to keep it charged.

  5. Service and maintenance checks

    All cars need a bit of TLC from the mechanic, which (depending on the job) could cost between $185 and $2,225. You might be covered if it’s under warranty, but make sure you're ready for these expenses down the track. You’ll also need to factor in replacing your tyres every two – three years (depending on how often you drive).


Pro tip: If you want to score a bargain, shop around at the end of financial year for some epic deals. Or if you’re after a used car, visit as many websites and car yards as possible.

Saving up for your new ride

Once you’ve figured out ballpark costs, it’s time to set your budget and work out how much to save each weekly pay. Say the car you like is $25K and you want to buy it in 12 months. Simply divide $25,000 by 52 weeks and that’s how much you need to put aside.

Or you can do it the other way with the 50/30/20 budget split. This is where you divide your income into three parts:

  • 50% is for your needs like housing and food
  • 30% is for your wants like eating out
  • 20% is your savings fund for things like (you guessed it) a new car.

Once that’s done, divide the total car price by your weekly savings amount to find out when you’ll be picking up your new whip.


Pro tip: Having your car fund in a bank account with no fees and a competitive interest rate, like our
USave savings account, might get you in the driver’s seat sooner. Check out this calculator to see how your savings could grow.

Buying a car is one thing, but keeping it running is another. When deciding how much you want to spend, consider all the costs and use our budgeting tips so you’re test driving in no time.

Need help keeping your money goals on the right track? Check out our in-app budgeting tool Free2Spend.

Ready to start growing your car savings fund? Linking a USpend transaction account with a USave could help to unlock our bonus interest rate!* Find out more here.

 

*Linking a USpend transaction account with our USave helps to unlock bonus interest on eligible balances in your USave account(s) when you also deposit $200 each month from a non-UBank account. The bonus variable interest rate will be applied to a combined balance of up to $250,000 held in your USave savings accounts, including joint accounts. Any remaining balance greater than $250,000 will earn the USave base variable rate.

Before making a decision to acquire a USave or USpend account, you should obtain and consider the relevant Terms and Conditions available at ubank.com.au. UBank’s deposit and savings accounts are issued by UBank, a division of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686.