How much does your car cost?

By | March 6, 2016

How much your car actually costs you financially - dividends down under blog

Author: Mr DDU.

How much does your car cost?

It’s a very, broad and open ended question, but worth considering.

Nearly every married household I can think of has two cars, one for the husband and one for the wife.

In our household, we only have one car and my wife is the main user, she doesn’t drive very much but we still get the freedom of having a car when we need it. The reason for having one car is mainly for money saving reasons, which I’ll get to, but there are other reasons too.

The bulk of the weekly travelling we do is my daily commute into work on public transport – funnily enough due to rush hour traffic, I get to work quicker than if I was driving. I also get to avoid all the road rage as well as gain the benefits of 20 minutes walking a day (exercise to and from the train station). Another benefit is a ton of reading-books time, which is helping me smash one of my 2016 goals to read 25 books .


So how much do we save by only having one car?

Let’s start off with the headline number, the purchase price of the car. For our current car, thinking about our needs and what would be good value, we bought a second hand mid-2000s model Mazda for $11,750 cash from our bank account, we didn’t take out a loan (no interest!). If we were going to buy a second car, we’d get something similar, so there’s $11,750 saved straight away. But the real benefit of this choice is going to be for our whole lives: we’ll always have one car. So, seeing as the car was already a few years old when we purchased it, I’d say holding it for another 7 years until it’s 15 years old is reasonable. If I kept driving until I was 75, 51 years away, I’d buy another 7 cars in that in 2016 dollars:

7 cars x $11,750 = $82,250


That is not including any finance loans or interest as this greatly adds to the cost of a car. You could expect to pay an extra 10%, maybe more or less depending on the interest rate and length of the loan. So over the course of 7 cars that would cost approximately $8,225 extra (nearly a whole extra car). As my wife and I aim to always buy our cars outright with cash and no loans I’m not including that extra cost in this calculation but it is something to keep in mind.

But there’s more to owning the car than just the initial purchase. There’s the registration number, insurance, petrol, average annual check up and road-side assist. Annually, we’d approximately spend respectively $750 + $600 + $1,500 + $300 + $100 = $3,250. Again, assuming I’d drive for another 51 years, so in 2016 dollars:

$3,250 x  51 = $165,750


Add in the cost of purchasing the cars and that comes to a whopping $248,000. Over a lifetime that’s a quarter of a million dollars. Even with choosing 2nd hand, good value cars without a loan and holding them for 7 years, it costs a HUGE chunk of money.

To make this a fair calculation, I have to add back the cost of public transport, which for a full year’s pass is $1,500 for unlimited travel on the network.

So $1,500 x 51 years = $76,500.

Still a cool $171,500 saved over my working life by not owning a car.

I’ve made a graph so you can see a visual representation of the difference.

How much does a car cost graph

This one major choice can shave years off how long I need to work. The average Australian full time wage is $74,724 before tax, leaving $56,043 after tax, meaning I would spend almost 3 whole years working just to pay for the expense of cars.

Thanks to not having a second car, we are 3 years closer to living the life we want to live.

 How many years do you hold onto a car for? Do you buy brand new or second hand?


Thanks for reading this article about our investing journey Down Under.

Onwards and upwards!

11 thoughts on “How much does your car cost?

  1. remembertowater

    We now have only 1 car too. Currently on our 3rd car.
    1st car (1989) we owned from 2002 to 2008 (19 years old, owned 7 ish),
    2nd car (1995) we owned from 2003 to 2015 (20 years old, owned 12 years),
    3rd car (2010) we owned from 2015 to … 2030?
    First car physically stopped running from lack of use. 🙂
    Second car written off (poor baby).

    1. Dividends Down Under Post author

      Hey RTW, thanks for your comment. Nice job making your car really work for you and get your full use of it. it definitely helps in the long run only having 1 car if that’s all you need.

  2. ambertreeleaves

    For a long tome we used to have only one car. Due to a change in job, we xe ided to get a second one. It is indeed an expensive object to own.
    When looking for another job, being able to use public transport will be a criteria again.

    1. Dividends Down Under Post author

      Hey Amber, thanks for coming by. I think that is a point worth making – if you don’t have an alternative transportation option, then you have to get a second car. Nor should needing a second car necessarily stop you have from taking a job. But like I just showed, it’s funny how we spend so much on a car to take us to work, just to work to pay it off..

  3. Vivianne

    I’ve always had a used car. my current car has 160K miles on it and still going. I met somebody who would make $500/mo and would trade in for a new car every 3 years. That person couldn’t afford to buy a house and has been renting all their life. It’s weird to see people priority their money into “lavish” expense and don’t pay their future self first.

    1. Dividends Down Under Post author

      Hey Vivianne,
      160k miles can be very reasonable, especially if it’s a very high quality car. Our car was at 90k km (about 55k miles) when we bought it. People do seem to be scared off by high miles, but sometimes it just means you’ll get good value. No reason to sell a car until it doesn’t fit your needs anymore or ends up costing a lot to run (and breaking down).

      People want to live the “rich and lavish life” even if they don’t have the money to back it up. It’s great to be around a community of like-minded people such as yourself 🙂

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  7. Jef Miles

    I’ve decided I’m going to catch up on your articles so you’ll see many comments coming through now, hope you can keep up 😉 haha..

    Love the fact that you’re buying a second hand car outright! That’s awesome and a big part of Money Glee too..

    I’ve had my 1998 Nissan Pulsar for 5 years now, bought it for 5K & it’s been (touch wood) very reliable 🙂

    1. Dividends Down Under Post author

      The more comments the merrier 🙂

      We love that we bought a 2nd hand Mazda, for cash. Hopefully this will be our car for many, many years. Before that we had a 1990 Toyota Corolla.

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