Buying a car
Your own wheels
Before you hit the car yards, do some research so you don't end
up with a lemon. Read our tips to help you find the car of your
How much can you afford?
First, make sure you have the budget for a car. As well as the
purchase price, factor in the yearly costs of registration,
insurance, maintenance and fuel. Find out more at saving for a
Once you are a car owner, keep your car insurance up to date: you may need it
Work out the real cost of buying and running a car.
MoneySmart Cars app
Work out which car is right for
It pays to focus more on the functions of the car than how it
looks. Ask yourself:
- Are you licensed to drive a manual or will you need an
automatic? Manual cars are often cheaper than automatic
cars, and can cost less to repair.
- How much can you afford on looking after your
car? A small (1-1.6 litre) car makes sense if you're
mainly driving around the city and want to save fuel. Larger cars
have higher costs for registration, servicing, tyres and
- Are you looking for a new or second-hand
car? While new cars may seem
more attractive, a good used car can be just as effective
and could save you thousands.
- Will the car have good resale value? This will
be handy if you plan to sell or trade in your car in the
Set your price range
Work out exactly how much you have to spend on buying a car. On
top of the sale price and the yearly costs mentioned above, when
you buy a car you also have to pay for an inspection, transfer of
registration and stamp duty.
Here are some tips on getting a good deal:
- Save hard: You'll have more options if you've
been saving or can arrange a car loan in advance.
- Do your research: Decide on the type of car
you want, then visit a few dealers, look in the paper and go online
to compare prices. Decide on a maximum price.
- Stick to your maximum price: When you find a
car you like, don't be tempted to go over your maximum price. If
you do, you may not have money to pay for other necessities.
- Try bargaining: You can often get a better
price if you bargain with dealers. If they know you're serious,
they may be prepared to do a deal.
Set, plan, track and manage your savings goals.
Rego expiry dates
Some cars are sold very close to their registration (rego)
expiry date. It means that shortly after buying the car, you will
have to pay more money to renew the registration, and possibly for
new tyres and repairs so it's roadworthy. Then there's compulsory
third party car
insurance. These costs can add up very quickly, so it may be
worth looking for a car with a longer rego period.
Going to a private sale, car
dealer or auction
You can buy a car from a private seller, a licensed dealer or at
A private sale is when you buy directly from the owner of the
car. Always check the paperwork - ask the seller to show you:
- Current registration papers
- Safety check report or a pink slip that's no more than 28 days
- In Victoria, a Road Worthy Certificate that's no more than 30
- Proof of ownership
Buying privately means you won't get a warranty. If anything
goes wrong, you will have to pay for it. To make sure the car won't
be repossessed because the owner still owes money on it, for as
little as $3.40 check the Australian Government Personal Property Securities
Licensed dealers can be more expensive than private sellers but
they can guarantee the car won't be taken away from you because
someone else owes money on it. Dealers also have to give a warranty
on cars under 10 years old that have travelled less than
Don't be persuaded to buy a car if you're not 100% sure. Take
your time to inspect the car and shop around. If a dealer pressures
you into signing a contract, it could be a sign that there's
something wrong with the car. Be wary if they use lines like
'There's another buyer interested so it may not be here tomorrow'
or 'You won't get a better price anywhere else'.
You might also be offered finance by a car yard. It can often be
more expensive than other loan options. Find out how to get the
best car loan for
It's a good idea to ask for a receipt if a dealer wants a
holding deposit. If you change your mind after you've signed the
contract, you might lose some of the deposit or have to pay a
percentage of the sale price. Get independent advice if you are not
sure about something; don't sign anything you don't understand.
Extra insurance offered by car dealers
If you are arranging finance for your car you may also be
offered add-on insurance products from a car dealer like loan
protection, gap cover or tyre and rim insurance. Think twice before
you take up these offers as they may not be good value for money
and only pay in limited circumstances. Find out more about add-on
Buying a car at an auction will be cheaper but there's no
warranty, no test drives and no inspections. Make sure you check
the paperwork and read the Private sale section
above on researching debts and warnings on pre-owned cars.
Learn about the conditions of bidding at your auction. Many
auction houses ask for a 10% or $500 deposit at the fall of the
hammer, and payment of the balance within a short period.
Get a vehicle
Check the value of your car by searching for cars online.
It may cost a few hundred dollars but getting a professional
inspection on a second-hand car will uncover any problems that can
be even more expensive to fix later on. A test drive will also help
you see if there are any issues.
Check how many kilometres are on the odometer and that it
doesn't look as if it's been tampered with. The numbers should line
up and the kilometres should match the service history in the car's
If you're buying a second-hand car, it's a good idea to take
someone with you who knows what to look for, and can explain what
to check in a car. You can also download a checklist for buying a
second-hand car from the NSW Fair Trading website, Money Stuff: Inspection
Take your time when buying your first car. Go in
with your eyes open, arm yourself with plenty of information and
don't feel pressured to buy.
Last updated: 10 Feb 2017