When buying your first car, think about the lifetime cost of the vehicle. In the short term, the price may seem pretty low. However, in the long-term, the lifetime cost of the car may be far more than you bargained for.
The lifetime cost of your car includes on-road costs, such as:
Luckily, there are some great tools to help make things easier. ASIC's MoneySmart Cars app helps break down the true cost of buying and running a car. On the app, you can input loan options and other hidden costs to discover the lifetime cost of buying and running a car, as well as alternate finance options.
Factoring in your budget, needs and lifestyle, weigh up the pros and cons of a new or used car. There's no right or wrong answer – it'll come down to your unique circumstances.
If you're considering a used car, bring along someone who's bought one or knows what to look for. Check the odometer matches the service history logbook and consider having a mechanic inspect the vehicle.
Next, you need to decide where you'll buy it. If you're buying a new car, you'll head straight to a dealership. If you're buying second hand, this could be done at a used car dealership, with a private seller or at an auction.
If you're buying a car in a private sale or auction, always check for the following paperwork:
Check on the Australian Government Personal Property Securities Register (PPSR) for any outstanding debt owed.
If you're considering purchasing a car with a loan, weigh up whether the additional fees and interest on the loan are worthwhile. If you pay for a car outright, it may take you some time to save enough. Financing a car means you can get the car straight away, but you'll end up paying more money in fees and interest. Consider talking to an independent financial advisor if you need advice on the best option for you.
Some people choose to lease a car – especially if the vehicle is used for business purposes. If you finance your car, you may have higher monthly costs than leasing, but you'll own something at the end. Leasing a car is less expensive, but you are essentially renting it.
To ensure you're 100% certain on a vehicle, take it for a spin before buying. A test drive lets you experience how the car responds on the road, and gauge its condition. This can help you decide whether it's the right one for you.
Many first time car buyers fall into the trap of accepting the first offer without shopping around. Browse around and see if there's a better deal out there. If you know the market value, you may be able to use that knowledge to negotiate.