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On-Road Costs vs Drive Away Prices

Drive away deals are one of the most prominent forms of advertising to get motorists into a new vehicle. However, what new car buyers need to be mindful of, is that when they see a vehicle’s price out in the car yard, there is a likely chance this does not include the relevant on-road costs. Therefore, once these expenses are considered, what started as a bargain could quickly lose appeal.

To begin, it’s necessary to understand that on-road costs are the additional expenses required to be paid to take the vehicle from the showroom and into your possession on the streets. This includes stamp duty, compulsory third party insurance, dealer delivery charges, and if applicable, the luxury car tax.


Stamp Duty

Stamp duty, which goes by various other names in each state, involves a fee based on the price of the vehicle. Depending on where the vehicle is purchased, the fee may also be influenced by the environmental performance of the car. Ultimately, the more expensive your car, including any added options, the more you’ll be paying in stamp duty. As such, it’s less common to see this expense covered for high end, luxury vehicles.


Compulsory Third Party Insurance (Registration)

Compulsory third party insurance indemnifies a driver for compensation in the event of injury or death in which they are at fault in a traffic accident. This form of coverage does not cover asset or property related damage, fire or theft, which is where vehicle comprehensive insurance plays a role. In most states and territories, compulsory third party insurance is included in the price of your vehicle registration. Therefore, before you are allowed onto the road for the first time, and each year when it is due for renewal, you must ensure this expense is paid.


Dealer Delivery Charges

This covers the administrative components of work that a dealership undertakes in order to prepare a vehicle for its new owner. Such charges might include things like washing the vehicle, completing the relevant paperwork, applying number plates, and other similar tasks. This is the one area where dealers can make their margins on a sale, which also means motorists have scope to negotiate this down as much as possible.


Luxury Car Tax

Last but not least, motorists are required to pay a luxury car tax of 33c for every dollar when they import a luxury vehicle that is less than 2 years old. The tax is applicable where the purchase price of the vehicle exceeds $65,094 (FY17/18). If the vehicle is a fuel efficient model, the threshold increases to $75,526. It’s rare for a dealer to come to the party on this expense as there are no concessions or discounts available for anyone. The fact of the matter is the cost would come straight from a dealer’s bottom line.


While a luxury car tax is not usually paid by dealers, they often take it upon themselves to ‘pay’ other on-road costs on behalf of motorists. This is usually marketed as a way of passing cost ‘savings’ to you, as well as the convenience of the matter. However, often not alluded to, dealers don’t pay the same prices for some of these expenses that you or I do. Another point that is often misunderstood, vehicle insurance costs still need to be organised by a new car buyer and are in addition to the on-road costs. Ultimately, when considering a new vehicle, look into the fine print and see exactly who is paying what.


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