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Buying a car
The full cost of buying a car in NSW: price, stamp duty, registration, CTP green slip, third-party property and comprehensive insurance, and car loans with flat interest.
For many Year 11 students, a first car is the biggest thing they'll have bought. The price on the windscreen is only the start. Before you can legally drive it away, there's stamp duty, registration and a green slip, and you'd be unwise to skip insurance.
Stamp duty
When a car changes owner in NSW, the buyer pays stamp duty (motor vehicle duty) to Revenue NSW when transferring the registration. For a passenger car, at the time of writing:
| Price (or market value) | Duty |
|---|---|
| Up to $\$45{,}000$ | $\$3$ for every $\$100$ or part of $\$100$ |
| Over $\$45{,}000$ | $\$1350$ plus $\$5$ for every $\$100$ or part of $\$100$ over $\$45{,}000$ |
"Or part of $\$100$" means you round up to the next whole $\$100$ before multiplying.
Find the stamp duty on a used car bought for $\$18{,}750$.
Find the stamp duty on a new car costing $\$52{,}300$.
Registration and insurance
| Cost | Compulsory? | What it covers |
|---|---|---|
| Registration (rego) | Yes | Permission to drive on public roads, paid yearly to Service NSW |
| CTP insurance (green slip) | Yes | Injuries to people in a crash you cause. Not damage to any car |
| Third-party property | No | Damage you cause to other people's cars and property |
| Comprehensive | No | Other people's property and your own car, including theft and hail |
Insurers charge drivers under 25 much more, because they are involved in a much larger share of serious crashes. A comprehensive policy for a 17-year-old can cost more than a year of fuel.
Car loans
Many buyers pay a deposit and borrow the rest. Dealer and personal car loans are often quoted with flat interest: simple interest $I = Prn$ on the whole amount borrowed for the whole loan, even though you are paying it off as you go.
Jas buys the $\$18{,}750$ car with a $20\%$ deposit and borrows the rest at $9\%$ p.a. flat interest over $4$ years. Find the monthly repayment and the total cost of the car.
Check Examples 1 and 3. How much more does the same car cost to get on the road for a driver under 25?
Set the loan term to $7$ years. The monthly repayment falls, but what happens to the total? Find a deposit that keeps the interest under $\$3000$.
Your turn
Find the total of price, stamp duty, $\$450$ rego and a $\$780$ green slip for a $\$36{,}180$ car.
Show the working
Duty: $36\,180 \div 100 = 361.8$, which rounds up to $362$ lots, so $362 \times 3 = \$1086$. Total: $36\,180 + 1086 + 450 + 780 = \$38\,496$.
Find the NSW stamp duty on a $\$12{,}000$ car.
$12\,000 \div 100 = 120$ lots. $120 \times 3 = \$360$.
Find the stamp duty on a $\$28{,}490$ car.
$28\,490 \div 100 = 284.9$, which rounds up to $285$ lots. $285 \times 3 = \$855$.
Find the stamp duty on a $\$60{,}000$ car.
Over $\$45{,}000$: $15\,000$, which is $150$ lots. Duty $= 1350 + 150 \times 5 = \$2100$.
CTP insurance (a green slip) covers:
CTP is compulsory personal-injury insurance. It covers no vehicle damage.
$\$10{,}000$ is borrowed at $8\%$ p.a. flat interest for $3$ years. Find the interest.
$I = 10\,000 \times 0.08 \times 3 = \$2400$.
For the same loan, find the monthly repayment.
$(10\,000 + 2400) \div 36 = \$344.44$.
Find a $15\%$ deposit on a $\$22{,}000$ car.
$0.15 \times 22\,000 = \$3300$.
Which insurance pays to repair your own car after a crash you caused?
Only comprehensive insurance covers your own vehicle.
Exam style: A car costs $\$24{,}900$. Rego is $\$450$ and the green slip is $\$520$. Find the total cost including NSW stamp duty.
Duty: $249 \times 3 = \$747$. Total: $24\,900 + 747 + 450 + 520 = \$26\,617$.
Exam style: $\$16{,}000$ is borrowed at $7.5\%$ p.a. flat interest over $5$ years. Find the monthly repayment.
$I = 16\,000 \times 0.075 \times 5 = \$6000$. Repayment: $(16\,000 + 6000) \div 60 \approx \$366.67$.