Buying your first car
Buying a car - especially your first - is an exciting experience. It’s one of the biggest purchases you can make, so to make sure you end up with a good buy (and not a lemon), here are some key things to think about. You'll be rolling in no time.
With a new car you will have a warranty and perhaps even capped price servicing - meaning you know exactly what your spend will be over a specific amount of time. But remember that your car will depreciate at a more rapid rate. By the time you leave the dealer your car may have even lost 20% of its value.
In comparison, a used car will be much cheaper so your initial spend won’t be as much. But you’re not going to be 100% sure of its history and are likely to have to spend more in ongoing costs such as servicing and tyres etc.
Regardless of whether you go for a new or used car, you want to choose a car with a good reputation that will hold its value - this will make day-to-day driving and re-selling easier. Do your homework and have a chat to any friends or family who might be in the know.
If you choose a used car, make sure you get it checked out by your state or territory motoring club. If that’s a bit pricey, ask someone you trust to take a look. Also, make sure it’s debt free by looking at www.ppsr.gov.au
- 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?
Once you’ve decided on your car, you’ve got to get your finances in order. There are two main options.
- You can use a personal loan to get your car now and pay it off in installments. A loan is useful if you have a regular income and can plan your repayments. Use our borrowing calculator to find out how much you may be able to borrow.
- By using a guarantor (someone who guarantees your loan repayments) you can improve your chances of getting a loan.
- You can use a NetBank Saver or GoalSaver to help you reach your goal faster.
- Saving can take you some time, but you’ll own your vehicle outright from the get-go.
A mix of both savings and a loan may be best. You can borrow less and keep repayments at a minimum, but get the car of your choice sooner rather than later.
While it's true that some people are better at negotiating than others, it's an important aspect of buying a car and easier than you might think. The biggest thing to remember? 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 take the emotion out of your decision and you can make a rational choice based on the facts.
Once you've agreed on a price, you may have to pay a deposit. This means the car is no longer for sale and the seller shouldn't show the car to anyone else. Don't be too generous with your deposit - 10% is usually more than enough - and make sure you get a receipt that identifies the relevant parties, the date and the amount paid.
On top of the purchase price of your car, you need to budget for 'on road' costs, which means your car is legally able to be driven on the road.
- Stamp duty - a percentage of the purchase price that goes back to the government
- Green slip - Compulsory Third Party personal injury insurance (NSW only)
And two extra costs if your car is new:
- Number plates
- Dealer delivery
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. The last thing you want is to be paying off a car you no longer have or can no longer use. Get a quote for how much insurance would cost on the car you’re interested in.
Don't forget to cover what's in your car. Cover your everyday items like jewellery, cameras and mobile phones or recreational equipment like a tent or surfboard with contents insurance.