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Tuesday, 26 October 2021 08:10

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A car is likely to be one of the most expensive purchases you ever make, so it pays to make sure you get it right.

What car should I buy?

With the number of cars on the market, it can be hard to find the one that's right for you. Before you start comparing vehicles, it's important to understand how much you can spend, as well as the features you're looking for.

What's your budget?

How much are you willing and able to spend on a car? Ideally, you'll be able to set yourself a clear price ceiling and decide straight away whether you're looking for a new or used car.

What features do you need?

You should have a general idea of how you plan on using the car, and the features you'll therefore need. These include:

By working out the features you need, you can narrow down the type of vehicles you'll want to compare. Once you've identified a shortlist of potential cars, you'll want to research them further, by checking out their specs and reading car reviews.

Where can I buy a car?

There are a number of places you can buy a car, but most vehicles are bought from car dealerships or from private sellers.When you're buying a car from a licensed dealership, the seller is legally required to disclose any major issues with the car and will often be required to solve defects or problems with cars they sell.When you're buying a car elsewhere, it's generally your responsibility to inspect the car thoroughly in order to make sure there aren't any serious issues with it.

Where to buy How it works What it's good for
Dealership (new car) Walk onto a car lot and shop for a new car Good for checking out a wide range of options, test driving each of them and getting some expert advice. If you want a new car and want to see lots of options in one place, this might be the best choice for you.
Dealership (used car) Visit a used car dealer to see what's available Good for findinga lot of relatively affordable options all in one place. If you're after a used car but want the flexibility to shop around on the lot, of you're not confident going to a private seller, then this might be the best option for you. 
Private seller (used car) Buy a used car directly from a private seller, typically the previous owner If you're after the best price possible, then buying used from a private seller is often the way to go. Make sure you know how to check the car thoroughly before buying, including its service history. 
Demonstrator vehicles Buy a lightly-used newer model vehicle that's been used for test drives, demos and other light purposes by a car dealership. This might be a good option if you want to buy almost-new rather than brand new and want to get a good price on a recent make and jmodel. However, the savings can vary and your options will naturally be more limited, and demos cars might be fitted with extras that you don't necessarily want but will have to pay for anyway. 
Imported cars Import a car from overseas It's safe to say that this will never be the cheapest option as it involves a range of additional taxes and expenses. However, sometimes it might be the only way to get a vehicle that isn't available in Australia. 
Car auctions Bid on vehicles at auction This can be one of the most affordable ways to buy a car - it's so good that car dealers often buy their stock at auctions. The downside is that the quality of auctioned vehicles and the quality of their discounts can vary, so you need to have a good sense of how much a car is worth ad how to properly inspect it in order to get a good price. Also, you typically won't be able to take the car for a test drive. 

 

How to get the best deal

The number one tip is to know how much a car is worth. Look up the value of the make and model beforehand, so you have a ballpark figure to work with. If someone asks for more than that, you can ask why it's so expensive and haggle for a better price.

From there, familiarise yourself with the different options and features you can get with the car. Decide which ones you want and which ones you don't and make sure to ask the seller if the car has any of the features you're after.

When's best to buy a new car?

What's the best time to buy a car?

May/June can be a great time to look for a car because of the EOFY sales. Deals around this time can see you saving a heap on optional extras. Dealers also often slash the price of the actual cost of the car and you might be able to take advantage of interest-free deals. Ex-demonstrators are also sold off, which can sometimes save you tens of thousands of dollars, if you don't mind a car that's been driven by a few people before you (on test drives from the dealership or occasionally as a courtesy car). Listen out for EOFY dealership ads around this time to find out what's available, the run-up starts in late April to early May.

Car salespeople have targets to reach and these are evaluated at the end of the month or quarter, depending on the dealership. Negotiating a better price around this time can be easier as salespeople want you to sign on the dotted line to help them meet their targets. Plus, most sales people will be on a commission, so they earn a bonus for each car sold.

Car stock becomes harder to sell towards the end of the calendar year because of the new stock that arrives at the beginning of the year. This means salespeople will be more willing to negotiate with you to get the vehicle out the door.

For the cars arriving in the new year, it comes down to cars having two plates. A build plate shows the VIN and the year and month of manufacture, whereas the compliance plate shows when the car was approved for sale. Due to the delay of cars being shipped to Australia from overseas, there can be a stark difference between these two dates. Find out the build date of the car and compare it to the compliance date; salespeople are more willing to negotiate prices on "brand new" cars that were built a while ago.

When new cars are released, buyers often run out to get the latest and greatest. Salespeople won't budge too much on these prices because they know the new models will move quickly. After this initial "rush" demand has been met, upgraded models start arriving and can cost the same price as the original model. Because of this, you can negotiate a lower price for the original model than you would've paid when it was first released.

Saturdays and Sundays are salespeople's busiest days, not making it an ideal environment for negotiating. Mondays and Tuesdays tend to be slower, allowing you more time to play hardball and see how low you can get the price.

How do I inspect a car?

If you're buying a new car, you might just need to do a test drive to check that it's right for you.For a used car purchased from a private seller, you're going to want to give it a thorough inspection, or take it to an independent mechanic for a check before buying.

Checklist for inspecting a used car

You're looking for anything you'll have to fix yourself, any damage that means it's a dud and any red flags that might indicate that the seller isn't being honest.

Visual inspection

Check:

On the inside:

Other things to look for:

The engine

The test drive

As you drive, check that:

The documents and information to get

You'll want to get:

Checking the car's history

If a car passes the inspection and test drive, the last thing to do before buying is to check its history. Unfortunately there's a very good chance it won't pass a history check. But that's exactly why you need to do it.

You're checking two things in particular. The first is whether there's any finance owing on the vehicle and the second is its service history, including previous repairs and whether it's ever been reported stolen or written off.

If you don't want to DIY, you can pay a car history service to check these for you. It generally doesn't cost much and usually includes both a PPSR and service history check.

Making the purchase

When buying a used car from a private seller, you'll need to transfer ownership to make it official. You should generally get all relevant documents at the time of purchase, including:

Vehicle registration

A PPSR notice if applicable

The seller will need to inform the state road authority that they've transferred registration and ownership of the vehicle and you will need to accept the transfer. This can generally be done online through your state motor authority.

What if I find a problem?

A new car should be pretty much perfect. If a brand new car has any flaws, that should at least entitle you to a discount, or the dealer should offer a solution.If you find any damage in a used car, you'll have to decide whether you can live with it or if you'll need to get it fixed. A scratch might not bother you, but any mechanical problems, worn tires or anything else that needs fixing might be a deal-breaker.Factor in any repair costs that you'll need to pay and add them to the "sticker price" to get a sense of how much you'll really be paying. If it comes out too high and the seller won't budge on price, it might be time to walk away.

If it's a problem that the seller has tried concealing, such as if you spot any painted-over rust spots, then you'll want to think twice about whether or not you really know what you're buying. Similarly, you probably don't want to buy a car from a private seller if they refuse to let you take it to an independent mechanic for an inspection.

If a car is under finance then the seller should mention this. Ideally, you won't buy an encumbered vehicle, but you can if you want. You'll need to have a plan for the finance, however, it's not your problem until you buy the car so the ideal option might be to make sure the seller takes care of it.

If a car has previously been written off then you shouldn't buy it, even if it seems fine. It's almost certainly not as fine as it seems.

How can I pay for my car?

You have a lot of choices when it comes to financing your car. Sometimes you'll sort it out before finding your vehicle and sometimes you'll pick out your car and then sort out the finance.There may end up being thousands of dollars difference between financing options, so it's important you understand how each option works before committing.

Find out what finance options are available below and compare the pros and cons.

Paying for the car outright

You can use your existing savings to cover the cost of the car.

Dealership finance

You can fund your car directly through the dealer. The dealer secures finance on your behalf and you then make regular repayments to cover the purchase of the vehicle.

Regular car loan

You can apply for a car loan with a range of banks, credit unions and non-bank lenders. You borrow what you need to buy the car and then repay the loan over a set term, plus interest.

Take a look at our current Car Loan offers

Finance from a car loan broker

You can also use a broker to help find you a car loan through their network of lenders.

Pre-approved car loan

This when you get approval from a lender for a certain amount before selecting a vehicle. You can then use the funds to cover the cost of the car you want.

Pro: It helps you to know where you stand and how much you can borrow.

Con: You might borrow too much or too little. If the car you choose won't be covered by the loan amount, you'll need to find additional funding, and if you borrow too much, you'll be stuck paying unnecessary interest.

What extra costs should I budget for?

The sticker price of the car itself is the main expense, but not the only one. You'll also want to make sure you have enough to cover all related expenses, both during and after purchase.

Additional costs when buying

Additional costs after buying

In some situations, you're likely to encounter other miscellaneous expenses too. For example, the luxury car tax (when buying a particularly expensive car), licence plate transfer fees (if you're buying the plates from the old owner – more if they're custom plates), stamp duty on the cost of your car insurance (built into your insurance payments) and more.

Are cooling off periods legal? Can I get a refund?

It's always a good idea to understand your consumer rights when making a big purchase.The main ones to know are:

Cooling off period. This is how long you have to change your mind and get a refund after buying a car. It works differently in each state.

Your car warranty rights. All cars bought from a licensed dealer in Australia, both new and used, will come with a consumer warranty to cover defects and failures shortly after purchase.

Cooling off periods

If you change your mind after buying, such as if you realise you can't afford the financing or that you just got a bad deal, then you have a limited time to contact the dealer in writing, cancel your agreement and get a refund.

This period of time is the "cooling off period". It works differently in each state, but in all cases, the cooling off period will only apply to purchases from licensed car dealers. It is not available when buying at an auction or from a private seller.

In NSW, The cooling off period is one day and usually ends at 5pm the day after purchase. It only applies to cars purchased under linked finance. This is when the financing is provided or facilitated by the car dealer. For example, if they either offer a loan themselves or refer you to a third party.

This article was originally published by Finder at https://www.finder.com.au/buying-a-car. This information is general in nature. does not take into account your personal situation and does not constitute financial advice. Please refer to any relevant terms and conditions associated with any financial product offering.