The road to car ownership is an exciting journey – one that’s packed with plenty of choices around the sort of vehicle to buy, who you're buying it from and how to pay for it. Luckily for new drivers out there like yourself, our comprehensive guide created with the help of motor experts can keep you informed and help make buying a car that little bit easier.
Setting Your Budget
Think of your vehicle as a huge piece of art in the driveway. It is not only something you get to enjoy, but also a major investment. But that doesn't mean buying a car should be all about the price alone - there's no point lavishing big bucks on your new set of wheels if you could hit a roadblock covering the cost.
That’s where drawing up a vehicle budget can help. There are two sides to creating one:
- The initial upfront purchase price; and
- The ongoing costs.
Your budget needs to be able to handle both. Here’s what you need to consider:
The upfront purchase price
If you don't have a lot of money saved up, taking out a car loan can be a good way to afford buying a car. You can spread out your payments over multiple years so they are more manageable for any budget. But make sure you compare all your options first.
Ongoing expenses
We’ve crunched the numbers to show the main running costs your budget should allow for. For more detail, head to Costs of Running a Car & Why you Should Keep a Budget.
Fuel
How much you pay in fuel depends on how often you drive, how far you drive – and how you drive. Going easy on the accelerator will lighten the load on your wallet, however if you buy a gas guzzler, then it's sure to cost a little extra. (Check out our guide on How To Save On Fuel)
Cost guide:
$85 per month for a small passenger vehicle, through to $200-plus for a terrain-beating 4WD1.
Insurance and rego
Annual registration costs are determined by state governments. As a general rule though, the heavier your vehicle, the more you could pay in rego2.
When it comes to insurance, compulsory third party (greenslip) cover is a must-have. The premium is determined by a variety of factors including where you live, and your driving record3.
Comprehensive insurance is an added extra but it makes sense. Your vehicle will be covered for everything from theft through to random damage from vandals. It’s especially important if your vehicle is financed with a loan, most of the time comprehensive insurance is a prerequisite, plus you’ll still need to keep up the repayments even if the car has copped serious damage – or gone missing altogether.
Cost guide:
Around $1,500 and $3,000-plus annually for rego plus insurance.
Regular service and maintenance
How many kilometres should you drive before taking your vehicle for a service? This depends on the make and model, as well as how old it is. The experts recommend having your vehicle serviced every 10,000-15,000km4 to ensure that everything's running smoothly.
Cost guide:
From $230-$1,000 annually
$245 - $3865
Tyres
Ideally, tyres should be replaced every 40,000km6. For a mid-range brand that can work out to $1,000 for a full set6.
Your vehicle's tyres need at least 1.5mm of tread to be roadworthy6. How often your tyres need to be replaced depends on how much driving you do, and how you drive. Keep it smooth and steady to get more life from your tyres.
Cost guide:
Allow around $1,000 to replace tyres every 40,000 km6
Add up the numbers
Use your car budget to work out what your preferred vehicle is likely to cost each year. If it looks like it could be a cash squeeze, think about ways to cut back:
- Choose a smaller, more fuel efficient vehicle
- If you plan to drive to work, think about car-pooling to share the cost
- Shop around for insurance
- Maintain a good driving record
- Fuel up on cheap days
- Be sensible with the accelerator and the brakes
- Keep your car garaged at night if possible. It keeps your car in better shape and can lower insurance premiums.
Deciding on the type of car to buy
Deciding on what type of vehicle may seem like a daunting task when considering all the factors involved: fuel economy, size requirements (ease of parking), price range as well as aesthetic preferences; but take the time to compare and you're sure to find just the right people mover for you!
New versus Used
Making the decision between new or used can be a tough one. With both of these options, there are pros and cons that need to be considered before making your purchase.
You know you want something new but with some thought it may turn out better for you financially if you buy something used.
New cars
There is nothing quite like the feeling of getting behind the wheel of a brand new vehicle. It has that special new car smell, and the odometer will have a laughably small reading that spells pure motoring joy without rattles, bumps and breakdowns, hopefully for many years.
But once you look beyond bragging rights, is a new car a better option than a used car?
We’ve set out the pros and cons in the table below.
The pros and cons of a new car
| Advantages | Disadvantages |
|
Reliability – a new car should bring you years of trouble-free motoring. |
The cost – on a model-for-model basis, a new car will cost more than a used car. |
|
Better fuel efficiency – you’ll get the latest technology straight out of the box, and that tends to make new cars a lot more fuel efficient. Check out the Fuel Consumption Label on the front windscreen, which shows how much fuel the car uses per 100 kilometres6. |
New cars can lose their value at a turbo-charged pace – the minute you drive out of the car yard, your car is no longer new, it just became second hand. Think about that for a moment. It can see your car lose 14% of its value each year in the first three years, followed by an 8% drop in value for every following year6. |
|
Improved safety features – car design has come a long way, and safety ratings for a wide variety of makes and models are published by the Australasian New Car Assessment Program (ANCAP)7. Just head to the ANCAP website to see how your preferred car shapes up on safety. |
Insurance costs will be higher – the higher your car’s market value, the more it can cost to insure. |
|
Factory warranty – Car manufacturers provide a warranty for new cars, which guarantees the vehicle for a set period of time – usually 3-5 years or the first 100,000 kilometres. If something goes wrong while the car is covered by warranty, you’re covered for the cost of repairs including parts and labour. |
Dealer buying only – unlike buying a used car, you’ll usually need to head to a dealer for a brand new vehicle. That can mean buying in a high pressure environment. |
|
New car smell |
The car you want may not be in stock – unless the car you want happens to be sitting in the car yard, your new car will need to be ordered in, and it can take weeks to arrive. |
Buying a used car can feel a little daunting, lucky we’ve made it easy for you with our downloadable checklist.
How to pay for your car
The way you pay for your car matters. Not only can it impact your buying options, it can also add to the cost of owning your dream machine.
Cash
If you’ve saved hard, you may be able to pay for your new vehicle with cash. It’s an economical option as you won’t pay any finance charges. But there are drawbacks.
Even the most dedicated saver is likely to face a long time accumulating the cash needed to pay for a reasonable quality vehicle. You may also need to drain your savings, which could leave you scratching for cash if an unexpected bill crops up.
Remember too, handing over cash won't always give you a discount.
Car loan
A car loan is the go-to option for car buyers across Australia – and with good reason.
A Nimble Car Loan combines a competitive rate with a choice of terms, so the repayments fit easily into your budget. There’s no need to dip into those precious cash savings, and Nimble even arranges to have the loan funds paid straight to the seller. Easy as!
Dealer finance
Car yard finance can seem like a convenient option, but there are plenty of traps for the unwary.
A big problem with dealer finance can be a lack of transparency. Chances are the dealer will focus on the weekly repayments rather than the interest rate you’ll pay. That makes it hard to know exactly what the finance is costing you – and how it stacks up against other options.
Be wary too of new car deals that offer a very low rate. They can come with a ‘balloon’ or residual payment. This is a lump sum that’s still owing on your car even after you’ve been paying it off for four or five years. The balloon can be substantial, and by the time it falls due it can be worth more than your car’s market value.
This all highlights the need to carefully check the fine print before you sign up for dealer finance and make sure you compare loans and finance to find out which is best for you.
Novated lease
Novated lease is a jargon term that just means paying for your car through salary sacrifice. It works like this. Your boss leases a vehicle, and pays for all the ongoing expenses including fuel. This cost is then deducted from your before-tax wage or salary.
This can make a novated lease a tax-friendly way to pay for a car. But – and it’s a big but – at the end of the lease term (usually 3-5 years), a residual payment is likely to be owing. It’s up to you to stump up the cash to pay the residual if you want to own the car outright.
A key risk is that if you lose or leave your job the car stays with your employer. That can put you right back in pedestrian-land until you find another employer willing to lease a car for you.
Where to buy your car from
The choice of where you buy your car from is dependent on whether you're in the market for a new or used vehicle. Many people are under the assumption that they need to purchase from an automobile dealer, but there's no rule saying so!
Dealerships
If you’re a new car buyer, a dealer is really the only way to go. Be prepared to shop around between dealers especially if you’re relying on a trade-in of your old vehicle to help cover the cost. Trade in values can differ markedly even among dealers of the same brand.
If you’re in the market for a used car, a dealer offers plenty of choice, and the advantage of a dealer warranty, but there are pros and cons to weigh up.
Buying from a private seller
Buying a car privately is an option if you’re after a used car. You may have more room to negotiate on price, and be under less pressure to buy compared to a car yard. However, it’s still important to weigh up the advantages and drawbacks of a private sale.
Car auctions
Used car auctions are held around the country – with many open for online bidding. On the plus side you may score a bargain. But without the opportunity to test drive the car, buying at auction can be a high stakes game.
Imported cars
You may have your heart set on a car – either new or used, that simply isn’t available through mainstream dealers in Australia. If that sounds like you, a direct import – also known as a ‘grey’ import could be the solution.
There are plenty of hoops to jump through when it comes to bringing a vehicle into the country. You’ll need government approval, and the car will need to meet Australian safety standards. It can also be a pricey exercise. Along with the cost of shipping, you’ll likely need to pay import duty – often 5-10% of the car’s value plus 10% GST6.
If you’re happy to wear the cost, be sure you can insure the vehicle. Check how easy it will be to get parts when it’s time to service or repair the vehicle.
How to haggle and negotiate
The art of the deal can help you save! Follow our 7 tips to negotiate hard.
1. Know the going price
Shop around to see what similar makes and models are selling for. It gives you a benchmark to know what’s a fair price.
2. Get that trade-in value in writing
Having trade-in offers in writing gives you negotiating power to pit one dealer against another.
3. Ask for more
Don’t be afraid to ask the dealer what freebies they’ll throw in to sweeten the deal. If you’re buying from a private seller, ask about a discount for a quick sale.
4. Don’t buy the ‘limited time offer’ pitch
If a red hot deal is available today, it’s bound to still be there in a few days’ time. Never let yourself be rushed into signing on the dotted line.
5. Skip the add-ons
Buy from a dealer and it’s almost a certainty you’ll be offered a variety of extras from tinted windows to fabric protection – for a fee of course. It’s wise to say "no thanks". These extras just add to your car’s cost, and you can almost certainly get the same service for less from a specialist shop later on.
6. Plan your timing
The end of the month when dealers are keen to meet sales targets can be a good time to get some bucks knocked off the sale price. It’s the same when a new model is released. Dealers are keen to move out older models, and that can be your chance to snare a bargain.
7. Keep your cards close to your chest
Resist the urge to spill the beans about your car buying budget, how much you’ve been approved for in finance – or even how much you love the car. Play it cool, be the one who asks the questions, and don’t give away more details than you have to.
Going for a test drive
Always get behind the wheel of a vehicle you’re planning to drive to see how it performs on the open road. Looks can be deceiving, and a car with a flashy exterior can be a disappointment to drive, with heavy steering or just not enough grunt for your needs.
Here’s what to watch for during your test drive.
1. Test the steering
Get a feel for whether the steering is loose or overly stiff. Use your ears too! Squeaky steering can indicate low power-steering fluid, or it could be a more serious mechanical problem.
2. Test the brakes
When there are no cars behind you test the brakes at a low speed. Does the pedal feel spongy or does the vehicle tug to one side when you brake? If the brakes aren’t effective, don’t try driving at higher speed.
3. Does it perform how you expect?
The car should handle well, turn corners smoothly, and accelerate or slow down without a hitch.
4. And don't forget to try the radio
If you love lip-syncing your favourite tunes while driving around town, definitely turn the volume up and see how your new ride scores.
Selling your current car
Upgrading to your next vehicle is exciting – and selling your old one can free up cash to save on your new set of wheels.
For everything you need to know about getting a great deal on your old car, head to our Tips for Selling your car.
Additional costs to consider
You’re nearly ready to choose your new car! All that’s left is to check for any extra costs to be sure they don’t blow your budget.
Stamp duty
When you buy a new or used car, you’re up for stamp duty. This is a state government tax, so how much you pay varies according to where you live.
In NSW for instance, stamp duty is based on the market value or price you paid for the car. In Queensland, duty is based on the size and type of the car’s engine. While in Victoria, duty varies if the car is new or pre-loved. Head to the website of your state/territory revenue office to know what you will pay in stamp duty.
Quick tip – the cost of duty is factored into the on-road cost of a new vehicle. When you buy a used vehicle, you’re likely to pay duty when you transfer the rego into your name.
Extras and modifications
You may have plans to turn your car into a true dream machine with all the bells and whistles. But before you start tricking up the car, be sure what you have planned is legal – and that it will be covered by insurance.
Is it legal?
Your state’s transport authority can let you know which modifications are illegal. But as a rule, you’re likely to get the thumbs down for overly dark window tinting, a super-lowered chassis, and loud exhaust systems6.
Is it insurable?
A stereo boombox, alloy wheels, and maybe a spoiler can all personalise your car. But they can also jack up the cost of insurance. Check with your insurer about the impact on premiums before you give your car a custom makeover.
Repayments
Before buying a car, use Nimble’s Car Loan calculator to work out the likely repayments on your car loan or play around with the numbers to see how your car loan will fit in with your budget.
Ready to hit the road? You're never too old to enjoy the thrill of driving a new vehicle.
A Nimble Car Loan combines a competitive rate with a quick decision. You could be driving away in your new set of wheels in just 60 minutes.*
Or if you’re after a smaller sum, a Nimble Small or Medium Personal Loan can help cover any of your additional costs so you can get behind the wheel sooner.
