- List needs & wants.
- Research market.
- Stick to budget.
- Check Insurance.
- Shop around.
- Avoid pressure.
The key to getting a good deal is doing your homework before you hit the car yards. Research the market to find out what is available at what price so you can set your sights on a realistic purchase.
Write a list of your needs and wants, and be realistic about what you will use the car for. You may have always wanted a flash 4WD but if all you are doing is driving around town it may not suit your needs and your budget.
Unusual models can be expensive to insure and repair, and spare parts may be difficult to obtain, whereas the more popular models, which may seem boring, are generally cheaper to insure and fix, as spare parts are less expensive and easier to obtain. Remember, passenger cars manufactured after 1986 run on unleaded fuel, which is cheaper than lead replacement petrol.
Talk to friends and workmates who are experienced car owners. Start looking at the newspapers for car ads and on the Internet to compare prices. Car magazines will also provide some detailed information about cars’ performance, specifications and prices.
Be prepared to do the rounds of car yards and car dealers to see what is out there, and allow yourself time to compare deals. Don’t be afraid to ask questions if you want to know more about a car on sale.
Once you’ve done your research you can realistically decide exactly what it is you are looking for.
When you are clear about what you need, it is time to set yourself a budget. Use the plan below. Remember the expense doesn’t stop at the car purchase; consider insurance, service and repairs and fuel costs. Ongoing maintenance may be higher for older cars or high kilometre cars.
Pre-purchase inspection fee
Servicing and repair
Ongoing costs (such as fuel, tyres, parts, RACQ membership)
- Consider the availability and cost of spare parts – especially for imported or older vehicles.
- Some compulsory and standard charges to be aware of are:
- Compulsory Third Party (CTP) insurance and registration fee – paid when the vehicle is registered
- Government stamp duty at 2% of the market value – for buyers of new and used cars
- Transfer fee – for buyers of used cars, and
- Dealer delivery charge – for buyers of new cars.
See the Queensland Transport web site for more information on vehicle registration and CTP.
The type of insurance that you choose may depend upon the car you buy and what you can afford.
Compulsory Third Party (CTP) Insurance is the only form of insurance that is compulsory. It is paid each year along with the vehicle registration fee. CTP protects you against any claims that could arise because of death or injury to other people caused by the negligence of anyone driving your car. It does NOT cover the driver of your car or damage to vehicles or property. You have a choice of CTP insurers.
Other types of motorcar insurance protect you against costs and liabilities if you are in an accident or your car is stolen, damaged or vandalised. Shop around for this insurance as policies and premiums can vary. Insurance will be more costly for cars bought on credit, modified cars or sports cars, and for drivers under the age of 25.
Get a firm insurance quote before buying the car. Arrange a cover note from an insurance company before taking delivery of the car.
Insurance options include:
- Comprehensive Insurance offers you the greatest protection. It covers you against fire and theft as well as damage to your car, other cars and property. If you borrow money to buy your car, it is advisable to have this type of insurance to protect your own financial interests.
Third Party Property, Fire and Theft Insurance
- Third Party Property, Fire and Theft Insurance (‘extended’ Third Party Property Insurance) covers you against accidental damage to other cars or property if you cause an accident. Your car isn’t covered for any accident damage but it is covered against fire or theft.
Third Party Property Insurance
- Third Party Porperty Insurance covers you against damage caused to other cars and property. This insurance doesn’t give you any protection for your car. However, it is recommended that you have this level of insurance as a minimum – without this insurance, damage caused to an expensive vehicle by you in an accident could be costly.
Ask for information on no fault insurance cover, as some policies may also cover collision damage to your car to a limited amount if it is the fault of an uninsured driver. Other conditions may also apply.
Check the following before taking the insurance:
- Driver(s) – Who is allowed to drive your car under the policy?
- Policy excess – What do you pay every time you make a claim? The excess may be related to the age of the driver or it may be a standard amount.
- Vehicle value – What will you be paid if your vehicle is written off or stolen and never recovered? Is your vehicle insured for market value or an agreed fixed amount? Find out how this value is calculated.
- Exclusions – What is excluded from the coverage?
- Rating or no-claims discount – Insurers usually give customers a numerical rating with premiums charged according to that rating. A Rating One driver is charged the lowest premium. When you first take out insurance you will probably start on Rating Six and improve one rating each year if you don’t make a claim.
Your policy may be cancelled or your claim refused if:
- you are involved in an accident and you are under the influence of drugs or alcohol.
- you are driving illegally, or
- you don’t list the following in the Duty of Disclosure section:
Modifications to your car
prior driving convictions or offences, and
Obtaining a loan
As with many car buyers faced with the costs of buying a car, you may need a loan. Carefully work out how much you can afford comfortably in loan repayments each month remembering that routine maintenance, running costs and repairs can average $65 – $75 per week.
Obtaining finance to purchase a car will add to the cost of the vehicle, so try to keep the amount borrowed to the minimum amount necessary. Most car traders offer to arrange finance but it may be cheaper to obtain your own. Always take time to shop around for the best deal and competitive interest rates.
Before you agree on a loan, make sure you understand:
- the type of loan
- all fees and interest rates
- the monthly repayment rates and due date.
- the total amount you will have paid at the end of the loan period, and
- insurance requirements.
Under the Consumer Credit Code, all credit providers must tell you what your rights and responsibilities are in any credit arrangement. They are required to include all relevant information in a written contract, including interest rates, fees, commissions and other important issues. Read the contract; ask any questions you may have so that you know what you are liable for.
Allow plenty of time to shop around and don’t give in to pressure to buy a particular car. Be wary of the ‘bargain’ that is priced much lower than the average price for that model. If it sounds too good to be true, it probably is.
There are several car-buying options available, but buying from a reputable, licensed car dealer offers the greatest protection.
NEGOTIATING THE DEAL
- Getting the absolute cheapest price may exclude you from receiving some additional benefits. Dealers value-add on the sale of cars where their margins allow. You may have to negotiate on both the price of the car and on repairs needed which are identified during any pre-purchase inspection, and which aren’t covered by a statutory warranty.
- Be wary of unrealistic trade-in offers. The price of the car could be increased to cover the difference. Compare the changeover price between dealers to work out the best deal. Try to negotiate to keep your trade-in until the car you are buying is ready for delivery.
- Never negotiate half-heartedly. If the car meets your needs and you are ready to buy – go for it, but make sure the person you are negotiating with has the authority to make the decisions and authorise the sale. In dealerships the salesperson may go back and forth taking your offers to the manager. If necessary, invite the manager to join you.
- During negotiations keep notes of offers and promises so you can review them during the conversation and be clear about what has been offered.
- Get any agreements or promises in writing and signed by the seller before you sign the contract.
- Know your financial limit and stick to it. If in the end you can’t get the price you want, be prepared to walk away – it is not the car for you if you can’t afford it.
- Don’t let a motor dealer put you under undue pressure to buy a car, if this happens a dealer can face significant penalties. Contact your local Office of Fair Trading for more advice.