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, it will most likely already have started losing value.
In comparison, a used car can 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 car, 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, if you 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 instalments. 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.
If you're employed
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.
Negotiating and paying up
Negotiating is an important aspect of buying a car (new or used), and it's 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 2 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's 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.
