6 quick tips for buying a car

Estimated reading time
 5 min

Learn all about

• The six tips you need to buy a car with confidence
• Learn about mental accounting and how to avoid it

Buying a new car (or used one) can be a huge deal – like life-changing and improving kind of huge.

It can give you the freedom to travel wherever you like, whenever you like (within reason, of course). But buying a new car, even if it’s second hand – comes with all sorts of things you need to think about. What are the upfront and ongoing costs? Do you need car insurance? What about buying some extras?

With so many different questions to consider, it’s easy to feel overwhelmed. That’s why we’ve got six tips to help you buy a slick set of wheels with confidence.

1. Research your options

When it comes to any big life purchase, doing your research is essential – and buying a car is no different. To help narrow down your options, think about your driving needs. If you drive a lot for work, a fuel-efficient car might help you save on petrol. Or, if you’re a one-car family and are planning to expand your brood, it might be time to become a two-car family.

From there, you’ll have to choose the type of car that would be best suited for you and your driving needs:

• New cars give you more freedom to decide the make, model, paint colour and other add-ons. They often come with the latest technology and manufacturer warranty. The downside is that new cars tend to be pricier up front, and there may be a wait once you order it.
• Used cars or demo models tend to be cheaper than new cars and come with shorter wait times. However, the car might not come with all the mod cons like Bluetooth connectivity or touchscreens. Plus, when you’re buying a used car or demo model, it’s unlikely you’ll get a guaranteed warranty to cover you if anything should go wrong.
• Fuel-only cars rely on petrol for their power. But the cost of petrol can fluctuate and become quite expensive over time. While these types of cars can be easier to find than hybrid or electric, they aren’t great for the environment.
• Hybrid cars bring the best of both worlds. They can be expensive to buy and maintain due to their hybrid nature, but this might be offset by petrol savings.
• Electric cars don’t rely on fuel at all. They are fully operational after being charged at a charging port and, as you’re not paying for petrol, you don’t have to worry about the costs of fuel. But these cars can have a more expensive up-front cost than their fuel-only counterparts.

2. Think about your finances

Your finances will be a deciding factor when it comes to choosing the car’s type, make, model and more. Take the time to work out how buying and owning a car will impact your wallet now and in the future by making a budget. This will help you understand how the different upfront and ongoing costs – like roadworthy checks and petrol – will affect your financial situation.

It also pays to consider your different payment options. If you decide to take out a personal loan, then include monthly or fortnightly repayments in your budget. Or, if you want to pay for the car with your savings, work out how much you’ll need to save each month to reach your goal of those new wheels.

Another financing option to think about is a novated lease. A novated lease is a financial agreement between you and a bank where you pay back the lender through salary sacrifice. That means your employer will pay repayments from your pre-tax salary on your behalf. A novated lease will reduce your overall salary and your tax. This change can affect your budget, so it’s a smart idea to map it all out before deciding if this is the right option for you.

At the end of the day, it’s important that you research the different car financing options (and check in with your budget!) so you can decide on how you want to fund your new set of wheels.

  Brain hack

Mental accounting is where we categorise money based on certain factors, like where it came from, how we’re going to use it, or how it makes us feel. This leads to allocating money based on specific spending categories, rather than considering the big picture. When buying a car, you might find the perfect model that’s slightly over your budget – but it’s all good because you can dip into other budget categories, like your entertainment and going out money, right? Since you didn’t spend too much in those categories this month, you’re good. If you decide to buy the car based on this logic, you might be spending more further down the track on fuel, maintenance and other car-related costs. To avoid this, stick to your budget and see if you can find a car with similar (or better) features that’s within your price range.

3. Look into the car’s history

Buying a used car? It pays to investigate the car’s history. You could look into seeing if the car you want to buy is debt-free, has been previously stolen or has been written off. If the car still has money on it that needs to be paid, chances are it’ll be coming out of your paycheck rather than the original owner’s. Doing the research now can help you be more aware of your choices and how they will impact your finances.

4. Get a mechanic to inspect the car

Chat with your local mechanic and ask them to go with you to check the car in person. They can provide an expert opinion on your vehicle and identify anything that might seem off. It’s the smart way to make sure you’re getting good bang for your buck. Also, ask the mechanic to be your passenger when you take the car for a test drive. They’ll be well-equipped to provide feedback on how well the car drives and help you spot anything unusual, like odd whirring noises.

5. Don’t get sucked into unnecessary extras

Most car salespeople will try to upsell car extras when you’re purchasing a vehicle. While some of these extras are handy to have, like blind spot monitoring, others like a fancy sunglasses holder aren’t that necessary. Do your research into the different types of extras you’ll actually benefit from and be prepared to stand your ground at the car dealership.

But if there are extras that you really want (like, really, really want), then shop around to see if you can get a better deal elsewhere. For example, instead of getting tinted windows when you buy a new car, see if you can go to car window tinting specialist instead – who knows, they might be cheaper!

6. Take out car insurance

Compulsory Third Party (CTP) insurance is something all Aussie drivers need to pay. Generally speaking, you need to take care of it when you pay your registration. However, it only covers injuries third parties (aka other people) may sustain in an accident where you are at fault. Want more peace of mind in case something happens on the road? Consider taking out additional insurance. Use comparison websites to make sure you’re getting the best policy possible for you and your car.