Buying a car in Australia – What You Need To Know

Car buying in Australia is more expensive than it might first appear.

When you buy a car in Australia, you usually need to pay tax on the purchase price – and this is often not added by the seller until after you have bought the car.

How to Buy a Car
Purchasing a car in Australia is similar to most other countries – you can buy a new car from a dealer or buy a used car from a dealer, auction, or a private individual.

Shopping around is likely to save you significant amounts of money. Organisations such as the Australian RAC will carry out inspections of any vehicle you are interested in, if you engage their services.

When you buy a used car from a licensed dealer you are guaranteed title/ownership and you are protected by the Motor Dealers Compensation Fund.

The length of warranty required by law varies from state to state.

A three month / 5000 km warranty for vehicles under 10 years old that have covered less than 160,000 km is normal.

For older / high mileage cars, a short warranty or no warranty may be provided for by law.

If you choose to buy your car at auction or from a private individual you should check REVS. REVS stands for Register of Encumbered Vehicles and will inform you if the seller does not have a clear right to sell the vehicle.

If the vehicle is not encumbered you can buy a REVS certificate for $12. This prevents repossession by a financier if someone else still owes money on the vehicle.

You can check REVS and read tips for buying a vehicle in Australia on the REVS website.

Costs
When you buy a car, state governments levy taxes on the purchase price. These taxes are as follows and are often referred to as Rego (abbreviation of registration):

1. The Registration Transfer Fee – this is currently $24 in New South Wales.

2. Stamp Duty – typical payments are shown below

Stamp Duty / Vehicle Registration Duty on Car Purchases

3. Motor Vehicle Tax – this is paid annually on all vehicles.
If it’s due on the vehicle you buy, you will need to renew it. Currently this would cost $177 for a medium car and $205 for a large car in New South Wales.

4. Compulsory Third Party Insurance – This is, as its name suggests, compulsory and covers injuries you may cause to other people. In Western Australia, for example, this is currently around $300 per annum.

Luxury Car Tax
If you buy a car from a dealer for more than $57,009, in addition to the Stamp Duty, you will also have to pay Luxury Car Tax.

For example, Luxury Car Tax of $5,225 will be payable on an $80,000 car and almost $10,000 tax will be payable on a $100,000 car.

No Luxury Car Tax is due if you buy a car from a private individual.