Car-ching: Ute and SUV drivers are spending an extra $4,500 each year

Posted: 4 February 2021 8:37 am
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Australians could be paying thousands of dollars more than necessary to keep their car running, according to new research by Finder.

Finder analysed the cost of owning a car over a 12-month period – including insurance, registration and petrol – and found that Aussies could be spending $7,963 per year on their vehicle.

Some drivers were also found to be spending up to 133% more than others on car ownership costs.

The analysis found that those who drive larger cars typically spend more on insurance, fuel and fines, spending $7,963 per year on average on car-related costs.

In comparison, those who drive smaller vehicles and get better deals on insurance premiums spend around $3,413 on average – a difference of $4,550 per year.

Taylor Blackburn, insurance specialist at Finder, said there are a handful of ways Aussies can save on vehicle running costs.

Finder analysed 36 different driver profiles and found an average difference of $2,643 between two car insurance policies.

"If you want to save some cash, your car insurance premium is the best place to start. Don't pay the loyalty tax – if you think you're paying too much, you're probably right.

"Before you let your policy roll over automatically, see what else is out there first. It could be the most cost-effective decision you make all year," Blackburn said.

Vehicle registration costs were found to be the next biggest expense. In New South Wales, registering an eight-cylinder Jeep Grand Cherokee will set you back $1,274, whereas South Australians will pay just $646 for the same thing.

The difference between registering a Jeep and a Toyota Yaris is the greatest in New South Wales where you'd save $522 per year on the smaller car rego, followed by $408 in Queensland.

Paying the right price for petrol can also have a sizable impact. For the average driver churning through 1,366 litres of fuel per year, paying 20 cents more per litre will set you back an extra $273 annually.

Blackburn urged drivers to think about other ways they can save on car ownership costs.

"In addition to your policy, you can help your bank balance by keeping an eye out for cheap fuel, carpooling when possible and avoiding speeding and parking fines.

"If you're in the market for a new car, opt for a smaller, more fuel-efficient vehicle that will be cheaper to insure," Blackburn said.

The average cost of owning a vehicle for one year

StateExpensive scenarioCheap scenario
VIC$7,781$4,771
NSW$8,220$3,153
QLD$8,098$3,145
SA$7,592$3,047
ACT$8,086$3,541
WA$7,992$3,116
TAS$8,165$3,408
NT$7,764$3,121
National average$7,963$3,413

Source: Finder

How to score a cheaper car insurance premium:

  • Pay a higher excess. Your excess is the out-of-pocket amount you'll need to pay in the event you make a claim. Paying a higher excess will lower the cost of your premium, but make sure you choose a manageable amount.
  • Review your extras. Many insurers allow you to pay for add-on benefits like roadside assistance or replacement keys to boost your level of coverage. While these can come in handy in your hour of need, they can jack up the price of your policy.
  • Drive cautiously. Maintaining a clean driving record means you'll typically pay less for insurance as you're considered to be less of a risk on the roads.
  • Shop around. Before signing up to a new policy, reach out to two or three other providers and request a quote. This way you can choose the most cost-effective option, but bear in mind that you shouldn't compare based on price alone.

Methodology:

  • Finder calculated the cost of owning a vehicle for one year, including car insurance, registration, fuel, roadside assistance, servicing, tyre costs and fines.
  • Finder analysed the costs using "cheap" and "expensive" scenarios.
  • The "cheap" scenario is based on a driver with the following characteristics:
  • Has a good driving history and is getting a good deal on their car insurance
  • Drives a four-cylinder Toyota Yaris weighing 1,100kg
  • Is getting current market rates for petrol, with an average assumed petrol price of 120 cents per litre
  • Is getting a good deal on roadside assistance
  • Receives no fines over the course of the year.
  • The "expensive" scenario is based on a driver with the following characteristics:
  • Has a poor driving history and is not getting a good rate on their car insurance
  • Drives an eight-cylinder Jeep Grand Cherokee weighing 2,500kg
  • Is paying 20 cents above current market rates for petrol, at 140 cents per litre
  • Is not getting a good deal on roadside assistance
  • Pays $60 in fines over the course of a year.
  • Car insurance policy options were analysed by Finder in 2019. Finder found an average difference of $2,643 between two policy options. One averaged out at $682 per year, while the other averaged to $3,325 per year.
  • Finder's Consumer Sentiment Tracker collected data from 4,713 owners of car insurance between July and December 2020 and found that 86% had not switched within the past 6 months.
  • In July 2020, a Finder survey of 1,005 respondents found 13% were planning on driving more within the next 6 months compared to pre-COVID-19.

How much could you save by comparing policies? Visit Finder's Car Insurance hub to find out.

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