Buying a new car checklist: How to buy a new car

Buying a new car can be an incredibly exciting moment. Whether it’s your first car or a much-needed family car upgrade, there’s little that beats that new-car smell. However, investing in a new set of wheels can also be an expensive decision, so it’s important that you don’t rush into it. We’ve pulled together this checklist on how to buy a new car.

How do I create a budget to buy a new car?

As a first step of buying your new car, it is a good idea to determine your price ceiling and the proportion of income you’re willing to spend – either outright (so the amount of your savings you are willing to spend) or through regular repayments (based on your borrowing capacity and ability to repay). A car loan repayment calculator can help with this. Once you have determined your spending capacity, you can then work out what type of car you’re in the market for.

CarExpert Comparisons Editor, Mike Costello, told Canstar it’s human to be tempted into a more luxurious model or to pay extra for an appealing option offered by a smart salesperson, but having a firm cut-off will give you clarity around when to walk away.

What research should you do first?

When it comes to buying a new car, research is key. All the information you need is available online, once you know what you are looking for, according to Mr Costello.

If you already have a certain car brand or model in mind, Mr Costello suggested you may like to focus your research around comparing features against two to three competitor products. He said that when researching, a good place to start is to read the manufacturer’s own website for data and look at various reviews from trusted media websites, as well as to read customers’ or owners’ reviews detailing ongoing user experiences.

If you’re starting with a clean slate with no particular brand or model in mind, you might start your research by setting a price ceiling and working out your priorities. According to Mr Costelllo, you could consider how many people you will be ferrying around, where you typically park, whether you carry cargo, what features are ‘must-haves’, and if you want maximum value-for-money or the latest and greatest tech. Determining what your priorities are may  help you work out a shortlist of possible car options, which you could then further research.

What are the ongoing costs of a new car?

Considering the ongoing costs of a new car – such as servicing, petrol, car registration and car insurance  – should also play a part in the decision-making process. A majority of car brands now publish servicing prices online and limit what their dealers can charge by offering capped-price servicing (CPS). Mr Costello suggested taking note of service costs and service intervals, as both can vary for new car owners.

When it comes to European brands, some sit at a higher price point when it comes to servicing, but not always (e.g. Skoda). Mr Costello said the luxury brands tend to offer competitive service packages simply because they have higher sales margins to counter it.

As a rough guide for overall costs of car ownership, you can have a look at these car running cost estimates from RACQ.

Is it worth shopping around?

With major purchase decisions, it can be a good idea to get multiple quotes. Mr Costello said some car manufacturers -– such as Tesla, Honda and Mercedes-Benz – have a fixed price sales model. However, many manufacturers have franchise dealers who can negotiate on price too, to some degree.

Take note of the offers page on the manufacturer’s website, said Mr Costello, and if you want to be extra sure, get a quote on your car of choice at two to three dealerships. While it can take more time, it might be worth the effort.

There are also specific times throughout the year when you may be able to get a good deal on a new car. According to NRMA, the five best times of the year to buy a car are the end of the month (dealers may be trying to reach a sales target), the end of financial year (new car sales season generally starts in June), December (dealers are keen to get rid of stock that will soon be old), New Year (cars from the previous year are usually discounted, or during a model run out sale (if a car has been around for three or four years, there’s probably a new model coming soon). This calendar keeps track of all the new and updated models heading to Australian car dealerships.

Sorting finance to buy a new car

When it comes to organising finance for your new car, Mr Costello recommended getting a dealer finance quote, plus an additional two to three other quotes if you’ll need a car loan. Car finance quotes for new cars can often be relatively easy to find online – such as from different banks or dedicated auto lenders. When obtaining quotes, make sure you’re looking for the best rate with the lowest fees, said Mr Costello. You could also consider a novated lease, if that’s an option with your employer.

It’s important to know that some car loans require a deposit, regular payments and a balloon payment at the end which is often roughly equivalent to the car’s worth, said Mr Costello. With a car loan that includes a balloon payment, you either buy out the car or trade it in for a new one, starting over and potentially refinancing again to buy a newer model at the end of the loan term. It’s a good idea to consider whether this type of finance is right for you and weigh up the overall costs.

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New car checklist

Here’s a 5-step quick checklist for buying a new car.

1. Set a budget
2. Research to find your ideal make/model
3. Check ongoing costs of your preferred car
4. Get multiple quotes from dealers
5. Organise finance if you need it

Once you’ve decided on your new car and made a purchase decision, you could also be interested in comparing car insurance options. Canstar compares and rates car loan and car insurance providers, with recent research revealing you might be able to save over $500 by choosing an award-winning car insurance policy.

Cover image source: Dmytro Melnyk/Shutterstock.com