This article is sponsored by GIO Insurance.
Buying a new car is an incredibly exciting experience, whether it’s your first car or upgrading your old one. But before you dive head-first into the search for some new wheels, there are a number of things you’ll want to consider first.
1. What sort of car do you actually need?
Let’s be honest, the car you want is probably very different to the one you need. Do you need the top of the range model, or could you get away with something less flashy? Think about the kind of driving you’ll be doing – is it just for driving around town, or do you like to get out into nature and go off-road? If you’re a tradie, for example, a convertible doesn’t make all that much sense. Or, if you’ve got a big family, you’re probably going to want to opt for an SUV rather than a tiny hatchback.
Consider things such as:
- The body type: Do you need a sedan, hatch, ute, SUV, convertible?
- The transmission: Manual or automatic?
- Petrol: Diesel, electric or hybrid?
This is going to be one of the most important factors to consider when you’re looking to buy a new car. Think about how a new car might change your service, insurance, and petrol costs if you already own one.
If you’re selling an existing car, do some research into how much your car is worth and keep this in mind if you’re considering trading it in for the new one. While trading in might be the easier option, you could be losing out on a lot of money this way. On the other hand, selling your car privately will likely ensure you get a good deal, and you might be surprised by how much more you’ll make if you do it this way and don’t trade it in.
Figure out how much you can really afford to spend on the car monthly, make sure you’re considering things like insurance, petrol and upkeep. Remember, don’t get so wrapped up in the excitement that you end up agreeing to an amount you can’t afford. Speaking from experience, that is one way to screw yourself over financially (for the next five or so years)!
3. Financing options
If you don’t have the cash to pay upfront for the new car, you’ll need to look into different options for financing. As mentioned above, you need to know your limit. If you’re going to go with your own financial institution rather than a dealership’s, seek pre-approval so you can have confidence when you’re negotiating on price. If you are shopping at a dealership, they can also provide you with finance options and tell you your repayment options, depending on how much of a deposit you can put down.
If you want more bang for your buck, consider your timing when you’re looking for a new car. If you can, wait until the end of the financial year, as most car dealerships will have deals on excess stock around May and June. December is also a good time to buy as demand is usually lower, and you might be able to negotiate a better deal. If you can’t wait that long, waiting until the end of the month is also a good strategy. Dealers will likely be trying to meet sales targets and may be more willing to lower prices to do this.
5. Car insurance
You won’t be able to drive your car out of the dealership unless you’ve got your Compulsory Third Party insurance. All drivers registering their vehicles in New South Wales are required by law to have a CTP insurance policy, also known as a CTP Green Slip. This insurance provides cover for people injured caused by your vehicle in an accident.
So, contact GIO Insurance to make sure you’re all set! While you’re there, don’t forget to consider getting some comprehensive cover. If you do, make sure the excess amount that you will need to pay if you make a claim is something you can comfortably afford if an incident occurs.
6. Brand new or second-hand cars?
A brand new car will often feel like a more exciting purchase than a used car. You’re also able to customise it for you, which could provide a long term benefit because you might keep it for longer, which will save you money in the long run.
Financially, a used car is probably a better option if you’re buying smart. First, make sure you’re aware of the market value of the car you’re interested in. Sites like Red Book can be helpful for this.
Newer cars are typically less likely to have mechanical faults or will be covered under a warranty. However, as soon as you drive that new car, the value will decline by up to 10 to 15 per cent straight away and can depreciate by up to 58 per cent after just three years. Some models will depreciate faster than others, so if you plan on selling the car in the near future, find out if the one you’re considering will hold its value.
If you’re looking to buy a used car, you can always look at newer cars that are still under dealer warranty which gives you an added layer of protection.
Are features like Bluetooth connectivity, Apple Car Play, cruise control, or a sound system important to you when buying a car? Make a list of non-negotiables for you. This might include car size, safety features, fuel economy and other extras such as those mentioned above – keep all of these in mind when looking for your new car.
Safety should be a huge priority for you when you’re considering buying a new car. Make sure to choose a car with a high ANCAP or Used Car Safety Rating. If you’re buying a second-hand car, you might want to organise an independent safety inspection to ensure it’s roadworthy. This can be done by a mechanic or the government road authority in your State or Territory.
9. Upkeep and on-road costs
You’ll also need to ensure you’ve budgeted for on-road costs such as stamp duty, your Compulsory Third Party insurance, registration, and if you’re buying new, you’ll also need to budget for number plates and dealer delivery. You’ll also want to think about the cost of servicing your car every year unless you’ve perhaps purchased a servicing package. And don’t forget fuel!
Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Consider the Product Disclosure Statement at gio.com.au before buying this insurance. The Target Market Determination is also available. This advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it