Things to consider when buying a car

It might be your first car, or the tenth time you’re buying a new car. Either way, it’s likely to be a significant financial decision. Learning more about what to consider may help you find the right car for the right price and make the decision to best suit your needs.

So, whether you’re buying a new car or a second-hand one, from a private seller or a car dealer, here’s what you could keep in mind. 

What is your budget and how are you paying for your new car? 

Before heading to a car dealer, it’s a good idea to think about how much you can realistically afford to spend on a new vehicle, as well as the ongoing costs such as fuel, insurance, registration and regular servicing. 

Once you have a budget in mind, think about how you’ll finance the purchase. If you have enough savings, paying for the car outright can help you avoid interest charges. Leasing a car may be another option, particularly if novated leases are offered by your employer. 

A car loan might be worth considering, too. Depending on your personal circumstances, you can choose to finance 100% of the cost of the car, or a portion of it if you have existing savings you’d like to use. 

As well as the purchase price of the car and running costs, there may be other expenses applicable when you buy your car. These could include stamp duty, GST, vehicle registration, transfer of ownership, dealer delivery charges, luxury car tax, and roadside assistance membership, which can be different in each state. 

Westpac’s borrowing power calculator could help you see how much you could afford, while our Car Loan calculator can show you how much your monthly repayments may be. 

Westpac offers car loans between $10,000 and $100,000 for a new or second hand car, which is used to secure the loan (credit criteria, fees, charges, terms and conditions apply).

If you are taking out a secured loan for a car, you will need to make sure it’s covered by comprehensive car insurance (as well as Compulsory Third Party insurance) before the loan is finalised. Comprehensive insurance helps cover loss or damage if the car is in an accident, written off, or if it’s stolen. 

• Explore Westpac car loans and EV loans

Are you buying a new or used car?

Quite often the question of whether to choose a new or used car comes down to budget, but there are other important considerations as well.

A brand new car will generally come with the latest technology, a warranty and vehicle servicing support, so if a fault were to arise with the car, you may not be too out of pocket as long as it falls within the warranty terms. 

Purchasing a new car also means that you have the option to include the extras that are important to you, such as window tinting or leather seats. There’s also the peace of mind that comes with knowing the vehicle’s history and car's previous ownership. Be aware though, the value of a new vehicle depreciates when you drive out of the car dealership.

If you're looking for a cheaper car, buying a used vehicle could be a good option, however it is difficult to truly know the history of the vehicle and how reliable it will be in the long run. One way to limit unforeseen expenses is to get a mechanic to look the car over and obtain an independent vehicle inspection. You could also find a certified pre-owned vehicle from a dealership, which has been thoroughly inspected and may come with a warranty. 

Does your car suit you? 

It’s not about whether red looks good on you (it does). Take some time to think about exactly what you need from your new car. For example, if you’re a tradie with a lot of tools then a convertible may not be the best solution for you. And if you’re a family of six then a minivan or SUV family car will be a better option than a small hatchback. List out the key features you need your car to have, as this will make it easier to decide.

Consider things like:

• The body type – sedan, hatch, convertible, ute, SUV
• The transmission – manual or automatic
• Fuel efficiency and emissions ratings 
• Safety features and ratings 
• Extras – Bluetooth connectivity, cruise control, sound system, reversing camera etc.
• Diesel, gas, petrol, electric or hybrid 

It could also wise to think long-term when buying a new car, so research the car’s resale value, especially if you plan to sell or trade in the car in the future. 

Have you done your research? 

So, you’ve decided you want a red car and now you’re seeing red cars everywhere? 

It’s not a coincidence; but there’s no need to rush out and buy a red car just because it seems popular, or you’re more aware of it now. Once you have an idea of your needs and budget, it’s time to do some thorough research on different models and brands. Look at online reviews, customer feedback, and expert opinions to get insights into how the car performs in different conditions. 

The next step is a test drive and inspection. A test drive can be an exciting experience – it allows you to see how the car drives, if you're comfortable driving it, and whether it meets your expectations. If you are buying a private second hand car then it may be a good idea to get the car inspected independently, just to be sure it’s roadworthy. A safety inspection can be done by the government road authority in your state or territory, or you can arrange for a mechanic to inspect the car.

Have you checked the used car’s history?

If you’re buying a used car, obtaining a vehicle history report could be a good idea. You can request a REVs check or access the Personal Property Securities Register (PPSR) to get information about the car’s history. Although these checks are not free, they could help you look for any records of accidents or repairs, and confirm there’s no outstanding money owing on the car. 

Have you negotiated the price? 

If you’re preparing to negotiate, understand the market value of the car you want. Be polite but firm, keeping your budget in mind, and don’t be afraid to walk away.

You might also like to negotiate add-ons such as extended warranties, window tinting or paint protection. Evaluate each add-on carefully and determine whether it’s something you really need – you might be able to save money by saying no to add-ons and extras. 

Finalising the purchase

It’s almost time to drive away! Finalising the purchase means completing all necessary paperwork, including registration, insurance and warranty documents. Ensure all the details are correct and that you fully understand the terms and conditions.

In some cases, car purchases come with a cooling-off period, so familiarise yourself with these policies and return conditions before finalising the deal.

The last step is to ensure the transfer of ownership, including updating the registration details, and making sure that it is completed correctly.

Car buying tips: 

1. Don’t forget additional purchase costs in your budget, including insurance, stamp duty, GST, registration and roadside assistance membership. 
2. A secured personal loan will require you to get comprehensive car insurance before the loan is made available. 
3. If you’re looking at used cars, a certified pre-owned vehicle from a dealership may provide more peace of mind than a private seller. 
4. Request a REVs check and access the PPSR to learn about a used car’s history. 
5. Future-proof your purchase: research your car’s resale value, particularly for electric and hybrid cars.

To sum up

Buying a new car is a significant financial commitment that requires careful planning. It’s all about setting a realistic budget, researching your options and understanding the pros and cons of new and used cars. 

Taking the time to do these things could help make sure you drive away with a car that meets your needs and gives you long-term value.