The decision to buy a car can be an incredibly exciting one. Whether you're buying your first car, upgrading, shopping for new cars in dealerships, or for used cars online, there’s nothing quite like the prospect of snatching up a new set of keys and driving off into the sunset.  

By following the seven steps below, you can be sure to minimise the stress and maximise the enjoyment of buying a car in Australia. 

#1. Set a budget

There are two types of car buyers out there: Those that enter the process knowing what they want and those that don’t. 

You might have your sights set on your dream car, a model you’ve always wanted. Or, you could simply have decided you need a car for a particular purpose and have set out to fill that need.

Either way, it’s important to assess how much you can afford to spend before going shopping.

For the average punter, there will likely always be a car that boasts a fancier badge, a nicer model, a newer model year, or more features than the one you first set your heart on. The world of cars is rife for upselling. 

That’s why it’s important to figure out a budget and stick to it before making any big decisions. 

Spending more than you can afford on a car might feel good at the time, but once the shine wears off your demeanour you might be left feeling sour.

#2. Research

No matter your situation, there’s probably a car out there that would suit it perfectly. The trick will likely be identifying that car.

“Having a clear picture of the lineup, the engine, and the features you need, rather than want, reduces the chance of being persuaded at the dealership,” automotive expert Alexi Falson said.

If you have a number of young children, for instance, you’ll want to be able to transport all of them safely. If you regularly holiday in a caravan, you’ll need a car with decent towing capacity.

Compromising on anything you need in a vehicle might be more than simply inconvenient, it could be dangerous. Not to mention, it can be expensive when a car bought to tackle a job doesn’t do it properly - such as towing a caravan it shouldn’t - ultimately demanding additional maintenance (as it's probably more likely to do). 

Speaking of maintenance, you might want to consider how much it would cost to upkeep a particular car over another. 

A V8 engine might sound cool and go fast, but it will cost more to run, and a vintage European hatchback, while enticing, could cost more to maintain than a newer car that’s more common in Australia. 

It’s also worth considering whether you want to buy a new car or a used one. And, if you’re keen on a used vehicle, whether to buy through a dealership or on the private market.

“The obvious benefit of buying a brand new vehicle is peace of mind,” Mr Falson said.

New cars are presumably without fault and boast a manufacturer’s warranty that can last years. But even then research is needed.

“The best advice for someone looking to buy a new car is to invest the time researching individual variants within a wider model lineup and to keep an eye open for run-out deals on a previous year's model,” he continued.

“Often, a vehicle’s yearly update isn’t as substantial as a manufacturer would have you believe, and you can bet the latest model will have a price premium attached.  

“I also encourage buyers not to be tempted into stepping too high up into a vehicle’s trim levels and instead write a shortlist of must-have features to find a more affordable variant that ticks these boxes without paying for a bunch of extras you might not need.”

However, when you buy a new car, your asset will begin to depreciate almost instantaneously. Hence, the expert notes it's typically far cheaper to buy a used car as the largest chunk of depreciation hits within the first three years.

So, if you’re in search of a bargain, you might want to check out the used car market, which exists both in dealerships and on the private market. 

While dealerships are convenient and the cars sold by them often come with some form of warranty, Mr Falson warns that it can be time consuming to assess all your options when shopping in person.

“Another disadvantage is that your excitement to buy, combined with a motivated salesperson can lead to some less than logical decision making,” he said.

On the other hand, the private market generally exists online, meaning you can browse from anywhere. But it comes with its own notable downside.

“In terms of private sales, it’s important to remember that a seller isn’t bound by the same laws that a dealership is when it comes to the condition of the vehicle and doesn’t have a reputation to uphold like a dealer,” Mr Falson said.

Consider a car buying service

If all the talk about shopping for a car and dealing with dealerships or vendors seems like a burden for you, you could consider a car buying service.

Car buying services, such as, typically do all or most of the legwork for you. Once you have a rough idea of the type of car you want and your budget, you can work with an agent at a car buying service who will go to their dealership network and find one for you.

Not only that, you could save a fair bit of money going this way, rather than risk losing the negotiation game at a dealership. Car buying services can source fleet-level pricing from the dealerships, and their fee is baked into the final sale price of the vehicle.

As well as this, car buying services can help find a car loan and insurance, drop the car off for test drives, and arrange delivery to your door.

#3. Consider getting car loan pre-approval

If you’re planning on financing your purchase using a car loan, the third thing you could consider doing is applying for pre-approval.

Pre-approval is essentially an indication that a lender considers you a worthy borrower based on your income, outgoings, and credit history

Being pre-approved successfully isn’t a guarantee that you’ll be granted a car loan, but it can give you an indication of how much you can borrow and the type of wheels your lender will help finance. 

That means, when push comes to shove and you’re ready to buy, you’ll have to contact your lender once more for settlement. 

Until then, you can rest with greater surety that you can access the funds needed to buy your next ride. 

It’s also a great way to assure yourself that you’re able to get a competitive car loan, which could help avoid temptation at the dealership.

Car dealerships typically offer finance, but the terms on the table there mightn’t be as appealing. For instance, many dealership finance products offer enticing interest rates, but also demand a balloon payment or a higher sale price.

VariableNew1 yearMore details
  • Get the option to choose to reduce your regular payment amounts if you opt for balloon payment
  • Available for purchasing new and demo vehicles
  • $5,000 to $150,000 loan amount
  • Required: Good credit history, stable employment history. Aus citizenship or PR. – New Car Loan - Home Owner Special

  • Get the option to choose to reduce your regular payment amounts if you opt for balloon payment
  • Available for purchasing new and demo vehicles
  • $5,000 to $150,000 loan amount
  • Required: Good credit history, stable employment history. Aus citizenship or PR.
FixedNew99 yearsMore details
  • Lower Interest Rates
  • No Hidden Fees
  • A quick and easy, 100% online application. No printing. No paper. No fuss.

OurMoneyMarket – New Car Loan

  • Lower Interest Rates
  • No Hidden Fees
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FixedNew1 yearMore details

Firstmac – New / Demo Car Loan (Fixed)

    FixedNew, Used99 yearsMore details

    SocietyOne – Unsecured Car Loan Excellent Credit

      VariableNew, Used99 yearsMore details

      Latitude Financial Services – Variable Car Loan

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        #4. Inspect & test drive

        Once you’ve narrowed down your budget and identified a couple of cars that would suit your lifestyle, it’s time to go kick some tires. 

        Head down to your local dealership or jump online to find cars being sold privately and have a test drive. Test drives are particularly important as they give you a chance to become familiar with how a car feels to drive.

        “Be sure to take your time and replicate some of your everyday driving situations,” Mr Falson said.

        “These include things like parking and three-point turns, which give you a taste of the vehicle’s visibility, steering weight, throttle response, and simple things like the driving position and ergonomics of the controls.”

        It also gives you a chance to consider how well the car runs, note any dents or scratches, and assess any obvious potential issues.

        Don’t be scared to test drive multiple cars, or to ask if you can take one or two for a longer test drive. A dealership once allowed this writer to test drive a car overnight, hitch it up to a trailer, and go for a spin. 

        While that was generous, at the end of the day you’re the customer and it's your money that you’ll be handing over if you decide to purchase. Don’t be scared to ask for things that would make you feel more certain.

        Many cars are sold with a roadworthy certificate, meaning it has recently been deemed safe to be driven on the road. Generally, cars can’t be registered with state-based roads and transport departments without having a roadworthy or safety certificate.

        However a roadworthy doesn’t tell you if it’s going to be reliable on the longer-term. One way to mitigate that worry is a pre-purchase inspection done by a mechanic. 

        “A mechanical inspection is an absolute must when purchasing even a slightly used vehicle,” Mr Falson said.

        “A qualified mechanic will look closely at common issues and ensure that regular, preventative maintenance steps have been taken; it’s too risky to simply take a seller’s word for it.”

        A pre-purchase inspection might cost around $150-$200, and are also offered by motoring clubs such as NRMA, RACQ or RACV, but that money is likely well worth it to avoid buying a lemon.

        Another thing to consider when buying a used car is the potential it could have been written-off or stolen in the past, or that it has debt attached to it. To check if that might be the case, you can search for its vehicle identification number (VIN) on the Personal Property Securities Register for $2 – a small price for peace of mind.

        Finally, before you set your heart entirely on a particular car, make sure its number plate, construction date, VIN, and engine number all match its registration certificate. If they don’t, consider it a giant red flag.

        #5. Negotiate & finalise your purchase

        Once you’ve decided on the car you want to buy, all that’s left to do is to complete the purchase.

        Commonly, however, the asking price isn’t the best price on offer. While not a blanket rule, haggling a little could see a few hundred dollars, or even a few thousand, wiped from the ticket price.

        “Doing your homework and being prepared to negotiate never fails to pay off, particularly when you’re making a huge purchase,” Mr Falson said.

        Negotiating might not simply be about reducing the price, however. If you’re buying from a dealership you might negotiate for extras – like floor mats or a towbar – to be thrown in for free, a longer warranty, or, if you're financing through the dealership, better loan terms.

        You might also decide to trade in your old car. That could see the determined value of your previous vehicle wiped off the cost of your new one.

        After negotiating comes paperwork. Make sure you’re happy with all that’s written down before you sign and cross reference all details against the car you’re buying, including the VIN and any registration details.

        This is also the point during which, if you have any clauses to the sale you need to add, you can do so. Such might include a clause stating that, if you aren’t able to get a loan for your car, you don’t have to go through with the sale.

        If buying through a dealership, you might have a cooling off period. During this time, you can back out of the sale. However, you probably won’t be able to take the car home until the cooling off period ends. If that doesn’t sound like your cup of tea, you can sign away your right to a cooling off period, but do so with caution. 

        #6. Transfer registration & get insurance

        And then comes more paperwork. Though, if you’ve bought through a dealership, a lot of this will have been sorted already.

        If you’ve bought on the private market, however, you will have to tell you state government that, A) you’ve bought your car, and B) you are now in charge of its registration.

        If it's already registered, you can request the registration be transferred to you. How to go about doing so will depend on where you live. It's best to check with your local roads and transport department for details. 

        Also, be aware that buying a car will generally also mean paying stamp duty, and this is typically payable when registration transfer papers are completed.

        In addition to that, you’ll likely want to make sure you’ve got at least third party insurance on your new wheels. The cost of insurance is a fraction of the cost you could be liable to pay if something goes wrong.

        The insurance associated with your rego - compulsory third party or CTP - is not enough and won’t cover your car or someone else’s if you run into it.

        Finding an insurer is easy and you can find all the details you need to do so on InfoChoice.

        #7. Drive away in your shiny new car

        With all that done, you’re free to take the keys to your new car, blast the stereo and drive off into the sunset. Enjoy.

        What red flags should you avoid when shopping for cars?

        When you’re hunting for a ride, it's important to remember that if something is too good to be true, it probably is. 

        Scammers can be active on car sale sites and many aim to entice wishful buyers by pricing cars well below their market value. Not to mention, dishonest sellers exist everywhere.

        “Always be wary of potential ‘catches’ that come with vehicles priced too cheap and never take a vendor’s word on the quality of the vehicle without a mechanical inspection to back up their claims,” Mr Falson said.

        It’s also worth keeping a lid on your emotions when searching for a car, the expert notes.

        “One of the biggest red flags is something that we all do far too often: We get over-excited and can lead ourselves down the easiest pathway,” he said.

        “A rushed decision is often a costly one, whether due to buying a more premium variant than you need or the less-than-competitive finance options you’ll find at the dealership.”

        It’s also worth keeping an eye out for hidden fees. While there are some legitimate extra costs that can be involved with purchasing a car, such as stamp duty or registration, others can be sneakily tacked on in order to rid you of your precious money. 

        Make sure you understand all of the fees you’re paying and don’t be convinced to pay extra.

        Image by why kei on Unsplash.