Buying a car

Your own wheels

You've made it through those L-plate hours, passed your driving test and now you want your own set of wheels. Before you hit the car yards, do some research so you don't end up with an expensive rust bucket. Read our tips to help you find the car of your dreams.

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 car.

Once you are a car owner, keep your car insurance up to date: you may need it one day.

Work out which car is right for you

You might have your heart set on a cool Mini Cooper but 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 petrol.
  • Are you looking for a new or second-hand car?
  • Will the car have good resale value? This will be handy if you plan to sell or trade in your car in the future.

Case study: Carl takes his time to shop around

""'When I first got my P-plates I desperately wanted to buy my own car because I was driving Mum's Tarago. But some of the cars I took for test drives had dodgy steering or rust and engine problems.

'It took months to find a car that had everything I was looking for. In the meantime, I saved more money so I could afford to pay cash for my Mazda.'

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.



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 an auction.

Private sale

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 old
  • In Victoria, a Road Worthy Certificate that's no more than 30 days old
  • 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, do an ownership check using the Personal Property Securities Register (PPSR).

Licensed dealer

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 160,000km.

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. Often this is more expensive than other loan options. Find out how to get the best car loan for you.

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.


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 inspection

Smart tip

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 log book.

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 Checklist.

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.

Related links

Last updated: 11 Sep 2015

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