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Budgeting your car expenses

Looking to cut back your spending? Cars can become expensive but follow these 4 steps and you could find yourself with a little extra money in your pocket.

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For most Australians owning a car is an absolute necessity for getting us from A to B - to work, school, friends and family and of course home. In fact, with close to 20 million registered vehicles in Australia, chances are that you or someone in your family owns a car.

But cars are expensive, especially when you add up running costs like petrol, insurance, maintenance and any repayments you’re making on your vehicle. But before you start thinking about trading in your wheels for a bus pass, have a read through these four simple ways to save money on your car costs.

1. Review your car insurance policy

Many drivers find that taking out a comprehensive car insurance policy is an absolute must for the benefits it can provide and the peace of mind it brings. But there’s no doubt that yearly premiums can put a real dent in anyone’s budget.

So how can you reduce your car insurance premium? First of all, there are a number of small actions you could take if they are appropriate in your circumstance, including removing any drivers aged under 25 from your policy, parking your car in a secure garage instead of on the street, increasing your excess and driving safely so you could possibly be eligible for any no claims bonuses.

But an even easier way to save is simply, by comparing policies and making the switch to a better deal. After all, not all policies are alike, especially when it comes to cost. That’s why regularly reviewing your policy and, if you find a better deal, being willing to switch car insurance policies could help you save hundreds each year.

And best of all, you can switch anytime, even if you’ve paid for your policy upfront - you’ll just need to arrange a refund. Just bear in mind that your current insurer might charge an admin fee if you do decide to switch, so make sure you factor that in when comparing costs.

2. Keep your wheels in top running order

Making sure your car is safe to drive is a no brainer. But there are added benefits to having it serviced on a regular basis too, because a healthy car is also likely to be cheaper to run and a more attractive car for future buyers.

Whether it’s low tyre pressure, leaks or worn and damaged parts, these can all have an impact on fuel consumption alone - and who wants to be paying for more petrol than they need to? The longer you leave these problems without attention, the more serious (and expensive) they’re likely to get so consider heading down to your local mechanic sooner rather than later.

It’s also worth remembering that a car in good running order is going to retain its value much better over time. So when it does come time to sell, make sure you’ve got a record of all those services ready for the next buyer.

3. Compare car loans before you buy

In the market to upgrade your existing car or buy your first set of wheels? One of the easiest ways to trim your car-related expenses is to make sure you compare financing options before you buy. And choosing the right loan could really pay off, with the potential for buyers to save hundreds of dollars on their car loan repayments.

4. Utilise the sharing economy

One way an increasing number of Aussies are cutting down their costs is by putting their cars to work via the sharing economy.

Whether that’s by driving for a ride sharing service like Uber in your spare time or renting out your vehicle on a car sharing platform like CarNextDoor, the sharing economy could be a simple way to turn your car into a handy earner and make up for some of its running costs.

Sound tempting? Just make sure you contact your car insurer before you sign up for any services because they may affect your premium.

Kirsty Lamont is a personal finance writer at financial comparison site mozo.com.au

This article is intended to provide general information of an educational nature only. This information has been prepared without taking into account your objectives, financial situation or needs. Therefore, before acting on this information, you should consider its appropriateness having regard to these matters and the product terms and conditions. Information in this article is current as at the date of publication. Terms, conditions, fees, charges and credit criteria apply.We do not recommend any third party products or services and we are not liable in relation to them. Any links to third party websites are for your information only and we do not endorse their content.

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