Most Australians underestimate the true cost of owning a car. Between servicing, tyres, insurance and rising fuel prices, the average driver is spending far more than they realise, often over $10,000 per year on average, according to the RACQ.
This is why searches for “car running costs Australia”, “how much does a car cost per year” and “is my car costing too much” have skyrocketed.
Here’s what’s really involved and how a novated lease can help keep things predictable.
1. The Real Annual Running Costs of a Car
These are the expenses most people don’t add up:
Servicing & Maintenance
Depending on your car, this can be $300-$1,500 per year.
Unexpected repairs? $1,000-$3,000.
Tyres
Quality tyres are $800-$1,200 a set, and need replacing every 40,000–50,000km.
Registration
Most states sit between $700 -$1,000 annually.
Insurance
Comprehensive insurance continues to rise – often $1,300–$2,500 per year.
Fuel or Charging
Petrol: $2,000 – $3,500 per year (and rising)
EV charging:
$300 – $600 annually (home charging)
Depreciation
The silent cost, often the biggest cost of all.
When you combine everything, the average car can cost between $8,000 and $12,000 per year, depending on how and where you drive.
2. Why People Underestimate Car Costs
Most car expenses come as “surprise bills”, rego reminders, major services, unexpected tyre replacements.
This creates the feeling of, “My car is costing me way more than I thought.” Because the costs are irregular, people forget how expensive car ownership really is.
3. How a Novated Lease Helps Reduce & Stabilise Costs
A novated lease packages all the running costs into one simple payment. This means:
- No more lump-sum bills
- No surprise expenses
- Clear budgeting every fortnight or month
- Running costs are budgeted using pre-tax income, making them effectively cheaper
With a novated lease, everything is pre-planned for the year, tyres, insurance, servicing, registration, and fuel/charging.
4. Bonus: How a Novated Lease Helps EV Drivers
Searches for EV leasing and “novated lease EV savings” have grown massively in 2025.
Here’s why:
- EVs are often cheaper to run
- The Fringe Benefits Tax (FBT) exemption on eligible EVs can create huge savings
- Charging is significantly cheaper than petrol
- Maintenance costs are lower due to fewer moving parts
For many drivers, a novated lease is now one of the cheapest ways to get into an electric vehicle.
Final Takeaway
If you’re feeling like your car is costing you more than it should, you’re not imagining it, car running costs in Australia have risen sharply.
A novated lease isn’t just a financing option. It’s a smarter way to budget, reduce tax, manage costs and avoid financial surprises.
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