The Expert Guide to New Car Fees
Posted by: Dan on 29/11/2016
The Expert Guide to New Car Fees
Car fees: you know them and you love them. Ok, you really dislike them. Just like finding out that you need a filling at the dentist or that fries will cost extra with your burger, few Australians will celebrate unexpected costs accompanying a new purchase.
Nonetheless, there are some car fees that are worth the extra cost when buying a new car. These are fees you should be sure you pay for now, to avoid more pain or expense down the road. There are also fees that you need to avoid along the way. Here’s a look at what you need to know.
Goods and Services Tax (GST)
First introduced in the year 2000 following a big political debate, the GST has been around for awhile now, but it can still catch some buyers off-guard.
While Australians know that buying a bottle of milk or paying a tradesman may come with a 10% GST charge on top, many motorists who tend to hang on to their cars for many years – or who perhaps have bought a used car along the way – may find themselves buying a new car for the first time with the GST charge in place.
When buying a new car, you can expect to pay registration fees. These can vary depending on what part of Australia you live in and the type of vehicle you buy. While many fees on this list are unavoidable, like this one, you can still try to negotiate down the overall cost of your vehicle based on the various fees you’ll need to pay.
While a GST and stamp duty on your new car may be set, a registration fee can often be smaller – so it’s ripe for a bit of bargaining with your dealership. So, while you will have to pay the fee no matter what, ask the dealer if they can throw in some extras or perks to sweeten the deal and lessen your overall costs.
License plate fees
You may be prepared to pay extra for air conditioning, that stereo system, or a number of other extras, but license plates are often an overlooked expense. When you’re buying a new car, you need be ready to pay up for those numbers and letters.
At the same time, you can turn this into a positive. In addition to using this fee as leverage in your negotiations with the dealership by trying to get them to throw in some freebies, this might be a sign that now’s time for you to get that really cool license plate you’ve always wanted.
Luxury Car Tax
This is the big one. This is the tax that many Australians get caught unawares by, as they prepare to take the keys to their new car, only to find that an extra tax was added to the price. When many Australians think of luxury cars, they think of a Ferrari or a Bugatti; but rarely do they anticipate that many models of BMWs, Mercedes, and Audis can actually be subject to a luxury tax.
Regardless, with BMW sales up 10% during 2015, Mercedes up a whopping 14%, and Audi up by 20%, many buyers find themselves subject to luxury tax when buying a new car. As the exact rate of the luxury tax varies depending on the vehicle, consult the ATO for in-depth info.
This tax is one of those types that you are unable to avoid no matter what car you buy. If you are buying a new vehicle in Australia, you can expect to pay extra for the official documentation that confirms the vehicle’s transfer of ownership to you.
Here is where a willingness to open up your Melways and get a look at dealerships around Australia can be worthwhile. As this is a state and territory tax (so not done at the national level), you may find that the cost of your new car varies greatly from one state to another. So, taking a road trip to pick up your new vehicle the next state over can be a smart move financially.
Dealer Delivery Fee
You’re likely keen to take ownership of your new car as soon as you’ve purchased it. You’ve signed the paperwork in the dealer’s office, and are ready to take your new ride off the lot for a spin. Oftentimes, though, the dealer first has to arrange for delivery of your car from off-site.
Of all of the fees that exist on new cars, this is the one that you have the greatest flexibility with. If you are intent on keeping costs to a minimum, ask the dealership if it is possible for you to buy the display model to drive out the door.
Not only does this mean you get your car faster and can drive it out the door that day, but it also means you’ll avoid the charge that comes with transporting your new buy from the warehouse to your home.
Consider all options to maximise opportunity
Buying a new car usually feels like a big and stressful process. This comes with the territory. But you do have the opportunity to make the process easier on yourself by ensuring that you have as many options as possible.
If you find yourself looking at a new car and feeling overwhelmed by all the new car fees, exploring options for purchasing a used car or even leasing a vehicle is worthwhile. Doing so can give you another avenue to find a car you love without all the added costs of a new vehicle.
What other costs have you come across when buying a new car? Let us know in the comments below: