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Guidance

A checklist for buying your first car

A checklist for buying your first car

Buying your first car is an exciting experience. Here are some things to consider before you get your first set of wheels.

New or used?

With a new car you’ll have a warranty and perhaps even capped price servicing - meaning you know exactly what you’ll spend over a specific amount of time.

Worth knowing: Your car will depreciate at a more rapid rate. By the time you leave the dealer your car may have lost up to 20% of its value.

In comparison, a used car will be much cheaper. But you may not be 100% sure of its history and end up spending more in ongoing costs such as servicing and tyres.

Worth knowing: See what your state or territory motoring club say about your used card or ask someone you trust to take a look. And make sure it's debt-free before you buy.

Regardless of whether you go for a new or used car, choose a car with a good reputation that will hold its value. This will make day-to-day driving and re-selling easier.

Questions to ask

  • What are the standard features?
  • What are the on-road costs?
  • How long is the warranty and is there capped price servicing?
  • Are there any promotional deals on?

Questions to ask about a used car

  • How long have you had it and have there been other owners?
  • Do you have receipts for all work done and a full service history?
  • How many kilometres has it done?
  • What’s it used for?
  • Has it ever been in a crash?
  • Is there any debt on the car?
  • Any objections to me getting it inspected or taking it for a test drive?

Getting your cash sorted

You’ve decided on a car so now it’s time to work out if you can afford it outright or, if you’re over 18, need to apply for a loan.

Saving

Saving can take you some time, but you’ll own your vehicle outright from the get-go. You can use a NetBank Saver or GoalSaver to help you reach your goal faster. Compare our savings accounts

Borrowing

Once you’re 18 you may consider a personal loan which you pay off in installments. This may help with the initial purchase of your car and on-going maintenance costs. Borrowing money is a big step though, so it’s important to have a regular income and a solid plan for making repayments on time, every time. Bear in mind that you’re not only paying back the loan, but interest too. Calculate how much you could borrow

If you’ve not quite saved enough, a mix of the two may work better for you.

Negotiating and paying up

Negotiating is an important aspect of buying a car (new or used) and easier than you think.

Worth knowing: Be patient. Walking away is your right as a buyer and you should be prepared to leave if you feel pressured or uncertain. Take time to think about the car overnight, it can help you make a rational decision based on facts rather than emotion.

Once you've agreed on a price, you’ll have to pay a deposit (10% is the norm). It means the car is no longer for sale and shouldn't be shown to anyone else. Make sure you get a receipt that identifies the relevant parties, the date and the amount you paid.

On road costs

On top of the purchase price of your car, you need to budget for 'on road' costs.

  • Stamp duty - a percentage of the purchase price that goes back to the government
  • Green slip - Compulsory Third Party personal injury insurance 
  • Registration

And two extra costs if your car is new:

  • Number plates
  • Dealer delivery

Get car insurance

No matter how good a driver you are, you can never be sure of what is going to happen when you’re on the road.

Depending on the cover you choose, car insurance can provide financial security if you’re involved in an accident or your car is damaged or stolen.

Worth knowing: Most people cover their car but overlook the things they frequently put inside it.  Cover your everyday items like jewellery, cameras and mobile phones or recreational equipment like a tent or surfboard with contents insurance.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.