How to buy a car

MICHAEL LUND
There are many ways to buy a car these days so it’s important you follow a few steps to make sure you are getting a good deal. That includes making sure the car meets both your needs and your pocket.

The Australian Automobile Association says the rules and costs involved with buying a car may vary from state to territory, so it’s important to check with your local motoring organisation and state or territory government. But here are a few general tips to help you make the right choice.

In this article we’ll cover:

1 What do you need a car for?

Knowing this upfront can help you narrow down your choices. Are you looking for a small runaround to get you from A to B on short journeys, or do you want something for longer journeys where comfort may be an important factor? Maybe it’s a UTE or an SUV you’re after.

Is it just for you or your family? Do you need something with plenty of storage space? What about fuel economy? It’s a good idea to ask yourself these and other questions before you start your hunt.

If this is your first car, then Tasmania’s motoring organisation, RACT, says don’t rush into a decision, as your dream car may not be suitable for your needs.

2 How much can you afford?

Are you buying a new or used car, and do you have a car to trade in? You can check the potential value of a trade-in or private sale of your own car on the RedBook website. You may choose to use this website too if you’re buying a used car to know if the advertised price is similar to what’s being offered by others.

If you have the money upfront, then that puts you in a good negotiating position. If you’re considering trading in a car with finance owing, you have a few options available, but should usually speak with your lender first.

If you need a car loan, it’s a good idea to shop around. Don’t just look at what a dealer is offering. Check with other lenders to see if you can get a guide on how much you can afford to borrow.

You may also want to check your credit score. Some lenders offer interest rates for personal and car loans in a range, so if you have a poor credit score, you may want to consider saving up or taking steps to improve your credit score to hopefully secure a lower rate.

Once you’ve found the car loan that seems right for you, see if you can get a pre-approval so you know you have the money to hand when negotiating a deal.

Remember there will be other fees and charges you have to pay such as stamp duty, rego and insurance, plus maybe even delivery costs if you buy a car from a dealer or interstate.

3 Do your research

Once you know the type of car you’re after and what you can afford, do plenty of research across a range of car manufacturers. Don’t just stick to one, you might be surprised what’s on offer when you look across a range of cars available.

It’s a good idea to read plenty of reviews and comments online to see what people are saying about a particular car.

Check the car specs and compare them between models. Details should be available on a manufacturer’s website, or request a brochure from a dealer. See if a new model is coming out soon as you may be able to get a good deal on the outgoing model.

If ground clearance is important to you, check how that varies for different cars. If seating or storage is important, again compare models as that extra few centimetres in the back may make all the difference.

Compare the fuel economies too but be mindful that what’s advertised may not actually reflect ‘real world’ driving, according to research by the Australian Automobile Association.

It is important as well to check if a car is safe, and if there have been any product recalls issued by Product Safety Australia (such as for faulty Takata airbags).

You can check a car’s ANCAP safety rating from the Australasian New Car Assessment Program (ANCAP) or use the website howsafeisyourcar.com.au. Keep in mind that ANCAP safety ratings are applicable when comparing cars in the same category only, so a five-star ANCAP rating for a hatchback isn’t the same as a five-star ANCAP rating for an SUV.

4 Take a car for a test drive

Whether you are buying from a dealer or a private seller, they should let you take the car for a test drive.

Make sure you drive the car on a range of roads and at different speeds. See how easy it is to park the car.

You will sit behind the wheel of a car for a long time so you need to know how comfortable it is, how easy it is to see the dashboard display, locate the buttons and levers. What about the visibility? Can you see clearly through the front and rear windows, and check the mirrors?

A woman in a car checking the mirrors.
On a test drive check to see if you have good visibility all around the car. Image: byswat/Shutterstock

For some people it’s important how the music system looks and works, plus any in-car navigation or other gadgets. Do you have enough cup holders? Does the car have a leather steering wheel or enough leg room if you are really tall? Some of your personal preferences about the interior look and feel of the car may matter to you just as much as what’s under the bonnet.

Check the passenger seat and what it’s like in the rear seats. Test drive several different models if you can and make notes of any likes and dislikes.

5 New or used cars

The greatest depreciation in a new car is usually in the first year of buying. If it’s a new car you’re after, check to see if the dealer is offering any demonstration models for sale. That can save you considerable money, if you’re okay with the car having been used in this way.

Buying a new or used car from a licensed dealer means you will be entitled to some form of warranty. If you buy from a private sale, you won’t get a warranty. Buying at auction may get you a good deal but again you have limited consumer rights if something goes wrong, so it’s best to check what rights you have in your state or territory. The Australian Competition and Consumer Commission has a handy guide on your rights in consumer law.

If you are buying a used car you need to check the car’s history, its service logbook, whether it has had any repairs or replaced parts, and if the odometer reading matches what’s advertised.

If it’s a private sale and you know nothing about cars then ask someone who does to come along with you. Get the car inspected by an expert. If you’re a member of a motoring organisation, see if they offer a vehicle inspection service.

Victoria’s RACV says to look for any fluid leaks as that could be a sign of poor maintenance, and mismatched paintwork could be from major repairs from a crash. Ask the seller too if the car has been modified at all. Car modifications can affect your car insurance premiums and may also impact the potential resale value.

If you are buying a car privately then it’s a good idea to check if the car is legal, hasn’t been stolen or written off or is subject to some outstanding debt.

For just $2 you can do a used vehicle search on the Australian Government’s Personal Property Securities Register (PPSR). Some motoring organisations offer a similar service or you could check at your local police station. All you need is the car’s VIN or chassis number, usually found under the bonnet, on a label in the driver’s door frame, at the bottom of the windscreen on the passenger’s side and on the registration documents.

Queensland’s RACQ warns that police can seize a stolen vehicle and you get no compensation. If there’s outstanding debt that’s owed on a car, this could also present a complex financial situation for you.

If the car needs a safety certificate, and the rules vary from state to territory, check that it’s valid.

7 Petrol, diesel or electric (including hybrids)

There is plenty of talk about electric cars with several manufacturers saying they intend to phase out their combustion engine models.

Since Australia no longer manufactures cars, the NRMA says there will likely come a point when we can no longer import any petrol or diesel cars.

Electric cars can be expensive, though prices are dropping, but they can be cheaper to run. You’d need to check if there is support for electric vehicles, such as charging stations, in your location.

A car at an electric vehicle charging station
If you want an electric car then check if there are any charging sations in your location, such as this one in Adelaide CBD, South Australia. Image: mastersky/Shutterstock

With hybrid cars, they can be powered by a battery or a combustion engine, depending on driving conditions. The battery is charged when driving so you don’t need to wait at any charging station, but Western Australia’s RAC warns that the battery will wear out over time and need replacing, and that could cost thousands of dollars.

You need to do your research to find out which option best suits your own needs and finances. If you want to buy a greener car to reduce any CO2 emissions then check out the Australian Government’s Green Vehicle Guide.

8 Negotiate on the price

Cars don’t always sell for the initial asking price, so be prepared to negotiate. Don’t be afraid to make a lower offer, if it’s accepted you’re the winner. You may find it difficult to negotiate on some popular cars, especially if there is a waiting list.

If you’re not comfortable negotiating, then you could engage the services of a car broker and they’ll do all the haggling for you. There are plenty of brokers around, but check for any fees or charges and whether they can help with the trade-in or sale of your existing car, if you have one.

Ask what optional extras a dealer may be prepared to offer for free or at a discounted price, such as carpets or a tow bar, but remember these costs could be added to your loan, depending on what you negotiate.

Be prepared to walk away if the price is not what you can afford, and compare offers from different dealers.

9 Get the paperwork

When you are about to finalise any deal, make sure you get all the relevant paperwork, including any contract, warranty details, car manual, safety certificate and registration documents. Make sure all the paperwork details match the car you are buying.

Don’t sign anything unless you are happy, and read the terms and conditions of the contract carefully.

You do have some protection if the car turns out to be a lemon — a car that has faults or defects — but it’s better to do as many checks as possible before signing the deal.

If you’re buying from a dealer, you may be entitled to a short cooling off period where you can withdraw from a contract without penalty.

The Queensland Government warns to be extra careful to avoid scams when buying a used car online. It’s a good idea to do the same checks as you would with a dealer or private sale, and make sure you never buy without seeing the car and having it independently tested.

Finally, make sure the car you buy is registered and covered by insurance before you drive it away.

Useful websites

You can check out reviews and advice on buying a car on the websites of all the state and territory motoring organisations, but for rules relating to buying see the government websites for your location.

ACT

ACT Government – Buying a motor vehicle

National Roads and Motorists’ Association – NRMA

New South Wales

NSW Government – Buying a vehicle

National Roads and Motorists’ Association – NRMA

Northern Territory

Automobile Association of the Northern Territory – AANT

Queensland

Royal Automobile Club of Queensland – RACQ

South Australia

Royal Automobile Association – RAA

Tasmania

Tas Government – Buying, selling or transferring a vehicle

Royal Automobile Club of Tasmania – RACT

Victoria

Vic Government – Cars

Royal Automobile Club of Victoria – RACV

Western Australia

WA Government – Buying a vehicle

Royal Automobile Club of WA – RAC

Cover image source: My Ocean Production/Shutterstock.com


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This content was reviewed by Sub Editor Jacqueline Belesky as part of our fact-checking process.


Michael is a senior finance journalist at Canstar, specialising in superannuation, savings, wealth and life insurance. He is an award-winning journalist with more than three decades of experience. His work has featured on the BBC, the ABC, The Sunday Mail, The Courier-Mail and The Conversation.