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Five ways to cut your car's running costs

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Getting your driver's licence is almost a rite of passage. Whether it's a necessity for work or you just can't be bothered catching the train, driving a car is part of day-to-day life for most of us. But with weekly transport and car costs climbing higher and higher, it's getting tougher to keep the wheels on the road.

The Australian Automobile Association's transport affordability index reveals that we pay an average of $17,147 each year, per household, for land transport.

This includes loan repayments, registration, CTP and licensing, insurance, maintenance, fuel, tolls, roadside assistance and public transport fares. Average car costs for the December quarter went up by $250, with loan repayments making up the top expense for motorists.

How can you shave back your car costs? We have five solutions to keep you happily chugging along.

Shop around for petrol

Thanks to new technology, getting a headstart on the price of petrol has never been easier. NSW motorists are lucky to have a range of apps available to find the cheapest price at the pump in real time. In other places it might be a matter of driving around to find the best price.

One of the apps available in NSW is My NRMA, which Peter Khoury, head of media at the NRMA, says can save you between 20c and 30c a litre.

"The best option to reduce your car costs is to shop around when you're filling up," he says. "In NSW there is such a huge spread in prices that often the savings can be quite significant. For regional areas, you're looking at saving 5c or 6c a litre if you go to the cheapest service station in your local area."

Watch your fuel consumption

The type of car you drive and the way you drive it can also have a big impact on car costs. Cars with tried-and-tested fuel efficiency ratings can slash your annual petrol bill by thousands of dollars. If you plan to upgrade, the federal government's greenvehicleguide.gov.au website lists all official "green" vehicles, with each graded on its fuel economy and carbon dioxide emissions.

For other vehicles, there are simple ways to trim your costs. For example, Khoury says many people don't realise that excess weight can make the car work harder, so empty your boot from time to time.

"Don't carry excess baggage. Get rid of that luggage or golf gear or diving gear, and make sure you have the right amount of air in your tyres."

He says considering fuel efficiency when you buy a car is important because the savings can be quite considerable.

Save on your loan

According to the AAA, loans are the biggest out-of-pocket cost for car owners. It's important to remember that there are many competing products on the market. Kirsty Lamont, from Mozo, says it's important not to grow complacent with your car loan interest rate. If you shop around, you might be able to find a better deal. Just take note of the early payout penalty and any other fees. She says Mozo's current top rate for a car loan is 5.34%.

"There's no point in shopping around for the best deal on your new car if you sign up to a loan with a nasty interest rate, so ensure you do your due diligence and research what rates are out there in the market," she says. "Application and monthly service fees may look tiny from the outset but they can add up, so factor in all the costs involved with a car loan by paying close attention to the comparison rate."

Get a discount on your licence renewal

All states have a long-term licence renewal option and most will save you a few hundred dollars over the long term (South Australia being the exception). Some states also offer licensing discounts to safe drivers.

State Max renewable licence term   Good behaviour offers
NSW 10 years (ages 21- 44 only)   50% off for 10-year renewal if you've had your full licence for five years and have committed no major driving offences in that time
VIC 10 years   If you're under 25 and maintain a good record on your provisional licence, you will be eligible for a free three-year licence
SA 10 years - no saving   Nil
TAS 5 years   If your provisional licence was issued on or after August 25, 2008, and you don't commit an offence between both provisional stages, you can apply for a refund of the cost of your P1 and P2 licences ($35-$50)
WA 5 years   Nil
NT 10 years   Provisional drivers with a clean record can receive a free 10-year open licence
QLD 5 years   Nil
ACT 5 years   25% off renewal if you have no traffic offence in the previous five years

While maintaining good driving behaviour can make you eligible for a discount, Khoury says the savings are two-fold, as you also avoid hefty fines for parking and speeding infringements.

"The savings are quite significant, depending on the type of licensing you're going for," he says. "Also, the money you spend in fines is something you have to consider as well. So in addition to not forking out lots of money for speeding and parking fines, a clean record can qualify you for other savings as well."

Get your car to work for you

To help you pay for your transport costs, why not get your car making money while you're at work? Available in Sydney and Melbourne, Car Next Door allows you to rent out your car when you don't need it. Most cars are listed for $5-$8 an hour.

You can keep 50% of the first $240 of hourly income each month and 75% on anything above that. You also get 25c for every kilometre driven to cover petrol and wear and tear. Membership of Car Next Door costs $60 a month, which entitles you to comprehensive car insurance and free 24-hour roadside assistance.

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Steph Nash was a staff writer at Money until 2017.
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