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Buying a car

Buying a car

If you're thinking of buying a car, here are some first steps to consider.

Purchasing a car is one of the biggest financial decisions you’ll make, not just because of how much it costs to buy the car but also how much it will cost to run.

Step 1: Do your research

Before you begin budgeting you want to answer a few questions:

  • Are you after a new or used car?
  • What are the features that are important to you?

Step 2: Set yourself a budget

Now you know what it is you’re looking for, set yourself a budget. Make sure you include stamp duty, compulsory third party insurance and any other costs that you may have to pay on top of the purchase.

Step 3: Set yourself a deadline

When do you need the car by? The will vary depending on how you’re wanting to pay for the car. If there’s a date when you need the car by, factor this in to your decision on how long you have to save.

Step 4: Decide how to pay for the car

Saving the full amount of the car means you won’t have to pay interest on any debt and is the most ideal option. Set a savings goals using Goal Tracker* in the CommBank app. We’ll break it down into weekly targets and help you set up automatic payments from your everyday account into your goal.

You can also use a personal loan to buy the car and pay it off over time. If you’re buying a car that isn’t more than five years old you may be able to take out a Secured Car Loan. By using your car as a type of security, you can borrow the funds you need at a lower interest rate than an unsecured loan. Use our borrowing calculator to see how much you may be able to borrow and what your repayments will be.

Remember that the more you’re able to save before taking out a personal loan the less you’ll have to repay, so put away as much money beforehand as possible.

A novated lease is a way you can finance a new or used car and make your repayments from your pre-tax salary with approval from your employer. It can also bundle your vehicle’s expenses into one simple payment. Novated leasing is a form of ‘salary sacrificing’, which effectively reduces your taxable income.

Car dealers offer finance as a means of buying a car as well. If you’re considering this you should ask:

  • What’s the interest rate?
  • Is there a balloon payment at the end of the loan?
  • Is the price of the car negotiable?

Step 5: Factor in all the costs

There are a range of ongoing costs that come with owning a car such as insurance, fuel and servicing. Can they fit easily into your existing budget? If not, you may want to look at a vehicle that’s cheaper to run.


* Requires a GoalSaver or NetBank Saver in your name only.

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. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.