Buying a car is exciting, but if you’re not sure you can afford one, it can also feel a bit overwhelming. Maybe you’re upgrading your ride, buying your first car, or replacing one that’s on its last legs. Either way, if the question “Can I afford a car?” has been on your mind, you’re in the right place.
Let’s walk through everything you need to think about, from upfront costs to ongoing expenses, and explore some smart ways to get behind the wheel without breaking the bank.
What “Afford” Really Means
When we talk about affordability, we’re not just talking about whether you can scrape together a deposit or make the first few loan payments. Affording a car means being able to comfortably handle:
- The initial purchase or finance costs
- Monthly or ongoing expenses
- The occasional surprise, like repairs or insurance hikes
- And still having enough left over for your regular life
Your financial situation plays a huge role here. Your income, existing debts, credit score, and savings all come into play. Many lenders also assess your ability to handle potential changes in interest rates over the life of a car loan.
A good rule of thumb? If buying a car leaves you stressed about your next bill or gives you buyer’s remorse, it might be time to rethink your options. Not the whole idea, just the approach.
Upfront Costs You Can’t Skip
Here’s what you’ll need to cover before driving off the lot.
Price or Deposit?
This is the obvious one. Whether you’re paying in full or financing, you’ll either be covering the total cost or putting down a deposit, usually 10 to 20 per cent.
Tip: Consider getting pre-approved for financing. It gives you a clear idea of what you can spend and keeps your shopping grounded. Use an online loan calculator to get a rough idea of what your repayments might look like based on your budget and interest rate.
Stamp Duty
This is a government tax based on the car’s value and type. In WA, for example, the rate increases with the price of the car. Don’t forget to factor this into your total costs when using a loan calculator.
Regos & Transfers
These vary by state but include the cost of registering the car in your name and keeping it road legal. These are some of the additional fees and charges that can sneak up if you’re not prepared.
Insurance First
You’ll need to at least have CTP, Compulsory Third Party, insurance, but most drivers also go for comprehensive cover. Insurers will ask for payment up front or at least for the first month. Your credit score may influence how your insurer assesses risk, potentially affecting your premiums.
Dealer Fees
Sometimes called delivery or handling charges, these are fees for preparing the vehicle. They can be negotiable, so don’t be afraid to ask. Keep in mind that any dealer-related fees and charges should be included when assessing affordability.
Ongoing Costs That Add Up
It’s easy to forget about these, but they can add up fast.
Loan Repayments
This is probably your biggest monthly cost. Be honest with yourself. Could you still make payments if your income changed? Always review the car loan terms carefully, including the interest rate and any hidden fees and charges. Use a loan calculator to test different scenarios.
Fuel Spend
This varies by how much you drive and what type of car you buy. Hybrids and fuel-efficient cars can save you a lot in the long run.
Insurance Renewals
Comprehensive insurance is billed annually or monthly, and premiums can change over time. Always shop around when it’s time to renew, and be aware that your credit score could influence your options with some insurers.
Servicing & Repairs
Regular services keep your car running well and protect your warranty. Unexpected repairs, especially for older cars, can hit your wallet hard.
Rego Renewals
Registration is an annual cost, and it’s easy to forget until the reminder shows up. Set it aside monthly so it doesn’t catch you off guard.
Tip: Creating a simple car budget spreadsheet can help you track all these ongoing costs in one place, including monthly car loan repayments and recurring fees and charges.
Hidden Costs Most Miss
Even if you’ve budgeted for the basics, a few sneaky extras can still pop up:
- Tyres wear out faster than you think, especially with city driving
- Parking can be a daily expense, depending on where you live or work
- Tolls can become a regular cost if your commute includes toll roads
- Depreciation affects resale value, which matters if you plan to sell or trade in later
Can’t Afford New? Try Demo Cars
Not everyone has the cash or wants the loan for a brand-new car. But that doesn’t mean you’re stuck with something unreliable.
Have you considered a demo vehicle?
Options like Subaru demo cars offer a clever middle ground. These are cars that have been used lightly by the dealership, usually for test drives or display. They’ve got very low kilometres but still come packed with perks:
- Excellent condition
- Full manufacturer warranty
- Lower price than brand new
- New-car feel without the new-car price
If you’re keen on getting great value without compromising on quality, demo cars can be a real sweet spot, especially when you’re working with a tighter financial situation and want to keep your car loan manageable.
Should You Buy Now?
Before signing anything, ask yourself:
- Do I know what I can realistically afford each month, comfortably?
- Am I planning for registration, servicing, and insurance?
- Do I have an emergency buffer for surprise repairs or life changes?
- Am I being swayed by emotion, or am I making a decision that supports my goals?
It also helps to check your credit score before applying for a car loan, as this can affect your approval and the interest rate you’re offered.
If you can answer yes to most of the above, you’re likely in a good position.
Yes, You Can Afford It, If You Plan Right
Affording a car isn’t just about income, it’s also about awareness. When you understand all the costs involved, you’re less likely to be blindsided down the track.
The good news is that there are more options than ever to suit different budgets. From smart financing to high-quality Subaru demo cars, you don’t have to go overboard to get a reliable, comfortable, and safe vehicle.
So if you’re still wondering, “Can I afford a car?” the answer might be yes. You just need the right plan, a little budgeting, and a dealership that’s happy to help you figure it all out.
Need some help exploring your options? Pop into City Subaru or check out our current demo range online. We’re here to help with no pressure, just good advice.