The Cost of Owning a Car: Australia V. United States V. UK

Contributed by Sanemto, 27 January, 2015

Finding a car, especially after relocating to a new country, is one of the first big steps anyone can take toward establishing a new life abroad. The freedom and mobility afforded by owning a vehicle of your own can not be underestimated. It allows for new career opportunities, greater ease of travel and the possibility of getting out and doing the things that probably brought you to your new home in the first place.

However, having the cash in hand to purchase a new car is not the only expense to consider before you make such a big decision. It is important to remember the cost of owning and driving your new wheels. Things like car loan rates (if you do not have the cash), fees and insurance are all things to consider--not to mention the cost of petrol.   

Here, we will be comparing the costs associated with owning a car in Australia, the United States and the United Kingdom. I should note that driving costs in different regions of these countries vary, and that this analysis is meant as a general comparison. Furthermore, currency exchange and car loan rates fluctuate, so it is important to keep that in mind. 

Car Loans

Car loans are necessary for anyone who does not have the capital to buy a car outright, and that means most of us. Loans are rates are determined by several factors (price of car, interest rate, term of the loan). So lets say, for the sake of this comparison, that we are looking at a car that costs $25,000 AUD and has a loan term of five years.

In Australia, a current standard car loan rate is about 8.99% p.a. (as of December). Your monthly costs would be $519 for a yearly total of $6228.

The United States, on the other hand, has extremely low interest rates, the average being 4.5% p.a. Monthly costs would therefore be $466.08 with a yearly total of $5592.96

The UK has rates similar to Australia, with the average annual rate being 9.8% p.a. This makes the monthly total £279.44 (approx. AUD$528.95), for a yearly total of $6347.40.

All said and done, total car costs in Australia is $31,130 ($6130 in interest). In the US the cost is $27,964.53 ($2964.53 in interest). And finally, the total cost in the United Kingdom is $31,737 ($6737 in interest). The United States definitely boasts the best rates, but the comparison between the UK and Australia shows how important comparing rates can be when deciding which loan is right for you. 

License Fees and Registration

In the United States, figuring out the cost of registration and license fees is much more difficult due to the differences in each state, their counties and even what type of car you drive. However data from the American Automobile Association shows that the average cost of owning a small sedan in the States is $480.

For comparison, using New South Wales as an example, in Australia it costs $62 to register a vehicle and $54 for an unrestricted 12-month license. This brings the total to $116.

The United Kingdom has a different situation entirely. A license costs £43 ($81), but there is no renewal fee. There is then a registration fee of £55 ($104). Additionally, there is an ongoing vehicle tax on carbon dioxide (CO2) emissions. For a small sedan the fee incurred would be about £30 ($56).  All of this totals at $241. However, if your car happens to be more than three years old it must go through an MOT (Ministry of Transport) which costs £54.85 ($102.54). This can make the total cost $343.54


With fuel costs, it truly depends on how much you drive and what kind of car you own. It is especially hard to gauge the costs considering how volatile the oil market currently is. But for the sake of discussion, here are the petrol prices as of 19 January 2015.

Australia: $1.16/L

United States: $0.76/L

United Kingdom: $2.00/L


Just as with license and registration fees, in the United States, the type of insurance required

on any car differs from state to state and varies based on what type of car you own. For the sake of comparison, we’ll be looking at at what it cost to fully insure a small sedan. Once again we are pulling our numbers from from the AAA data mentioned above. They state that the average cost of insurance is $981 annually.

In Australia, insurance is compulsory, but most experts recommend having comprehensive insurance to help offset unforeseen expenses. Using the small sedan as an example, insurance costs can range from $800 to $1800 depending on the insurer and the level of coverage. The average price for a decent plan, however, is $1200.

The UK has plans ranging from £600 to £1400, but the majority of those plans fall around £700 ($1300). It should be noted that it is possible to pay for insurance monthly or yearly, the monthly option being option being more expensive by about  £100 ($187)        


Despite the difference in currency and the ever changing exchange rate, owning a car comes with a lot of costs that are over and beyond the ticket price, especially if you’re still paying off a car loan. As might be expected, it is much cheaper to own and operate a car in the United States than Australia, and slightly more expensive in the United Kingdom.

The main point to take away from all of this is that there are significant costs that should be considered before making the decision to purchase your own car. It is most important to keep these costs in mind when considering what your professional and travel needs will be after you relocate, so that you are not caught off guard by unforeseen expenses. But if you are ready to take that next big step in your life, do not forget to enjoy the journey!     

Tags: business | interest | currency | Insurance | United States | Australia | United Kingdom | insurance | fees | tax | vehicle tax |



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