Time to read : 3 Minutes
Aussies love their cars. We have one of the highest cars-per-capita rates in the world, with 769 registered vehicles per 1,000 Australians – far more than the UK, Germany and even Japan.
The new-car market has slowed since the pandemic but the second-hand market is booming.
But with a growing second hand market, it also hard to know if you're getting a great deal or buying a lemon - and the cost of the vehicle is unlikely to be the total amount you'll spend.
There are multiple ways to buy your next car – buy outright, trading in your current car, financing through a dealership, getting a car loan and more.
Remember to budget for extra costs like registration, servicing, fuel and maintenance.
Buying through a private seller might be cheaper, a dealership may offer more protection.
Hidden costs of buying a car
There are multiple ways to buy your next car – buy outright, trading in your current car, financing through a dealership, getting a car loan and more.
Factor in the costs of registering the vehicle, annual servicing, fuel, as well as other fees like parking.
Car insurance is essential for driving in Australia, and you may want to get more than just compulsory third party (CTP).
Under-25s are more likely to pay more for insurance. Additional drivers and your excess may also push the costs up.
It may be worth paying an expert to conduct a used-car inspection before handing over the cash to avoid expensive mechanic bills in the future.
Be aware: With used cars in high demand, more Australians are buying second-hand cars interstate. You'll need to pay for the registration to be transferred to your home state as well as pay the cost of transferring the car into your name if you go down this route.
Different strategies for buying your next car
No matter what type of car you are looking for, there are various ways to go about purchasing it. It's important to do your due diligence to protect yourself – and your wallet before buying though.
Buying new or used from a dealer could offer more protection. Car dealerships are regulated whereas you will have to take a private seller at their word.
Get a loan quote before you head to the dealership. It'll make it easier for you to figure out if the dealer's financing options are good value or not.
The cheapest vehicle may not always the best. Be prepared to factor in how much you would be left out of pocket if it breaks down in the following weeks or months.
The bottom line
Don't be pressured into a deal, even in the current climate. Taking time to check the car for defects, getting pre-approval on a loan, and making sure you can afford things such as the rego can all help your cash flow.
