Guide to buying your first car

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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If you just got your P-plates and are sick of begging for Mum and Dad’s keys, it’s time to get your own set of wheels. Buying a car is bigger than huge process – it’s completely massive. Where do you start? This is our guide to make finding your first car that little bit easier!

What kind of plates do you have?

First thing to look at is what kind of P-plates you have. Probationary plates are on graduated schemes in many states of Australia, and you must know what your state authority allows before plunking your hard earned on a car. Visit site for more info.

Finding the right car

There’s as many cars out there as there is people. Like people, they come in all shapes, sizes, colours and temperaments. What you should first consider is if you’re buying used vs. new.

​​USED CARS are usually cheaper than new cars on first glance. Depending on the km’s they’ve done and what condition they’re in, you can get a good deal. If you’re not careful, you could inherit a car with numerous reliability, fuel economy and mechanical faults. You’ll save heaps in insurance compared to buying new. But you will be sacrificing new features such as higher ANCAP safety ratings and you may have to sink more into frequent repairs.​​NEW CARS do have a high price tag and lose up to 20% of their value driving them off the lot. Even so, you’ll benefit from a new car warranty, scheduled capped-price servicing (if applicable) and better reliability, features and safety across the board. Another plus; financing is usually cheaper than on used vehicles because it’s a lower risk on the road.

DO YOUR HOMEWORK; there’s no excuse! Research the type of car that

– Suits your budget, which includes:

– Suits the level of P plate you’re on

– Suits your needs today and suits you in the future.

There so many websites and trade magazines out there that can compare and contrast cars. They compare similar makes but identical models so you can find the best price (or at least, the most reasonable price.)

Next thing you have to decide is whether you’re going to buy from a dealer or a private seller.

​​PRIVATE sellers have only one thing in mind – selling the car. It’s why they’re doing it! They might need to get rid of it urgently, and are willing to part with it for miles below the market price. However, the responsibility to test drive, research and figure out that your car does everything it says on the tin is yours and yours alone. Worse still, you could end up buying a car that’s listed as a write-off or stolen.

​​DEALERS are a sure bet when buying cars. Dealers have to follow regulations and rules that protects consumers. Some dealers offer a cooling off period if you change your mind. Dealers can offer you guarantees and extended warranties that private sellers can’t. Found the car that suits your budget and ticks all your boxes? Now it’s time to test drive.

​​TEST DRIVING is vital before you buy. How will you know if you like the car unless you take it for a spin? The test drive will tell you if the car has any unusual habits, irritations or worse; things that need repair. Here’s what you should do when test driving:

  • ​​Start the engine from cold – that is, starting the engine a long time after use. This shows you if there are problems with ignition.s
  • ​​Test the car at all speeds – high speeds, low speeds and everything in between.
  • ​​Test on a variety of roads – to test cornering and handling.
  • ​​Check how well the gears change – if they get stuck often, there may be gearbox problems.
  • Do a manual check of all the internal systems and gauges – literally flick everything off and on, seeing they’re in working order.
  • Check out weird sounds – especially knocks and rattles from under the bonnet!
  • ​​Do an emergency stop – best if you go somewhere secluded. If the brakes are shot, what’s stopping you?
  • Check for warning lights – the dreaded lightning bolt in the engine. Look for other lights such as battery or oil. Better yet, check that the lights still work!

Remember, you should also get a third party, trusted family member or mechanic to check the car. Insist on seeing the service history and roadworthy certificate.

Found the right car? Great! Now, the boring stuff – REGO, INSURANCE and FINANCE.

Everyone has to pay REGISTRATION each year. It’s unavoidable. You pay it or you don’t drive. Dealers will usually kick-start the process. If you’re buying privately, you’ll have to get the forms and submit them manually. COMPULSORY THIRD PARTY insurance or CTP is included in the registration cost (except for NSW, ACT and QLD.) If you’re buying privately, you’ll also have to calculate and pay for STAMP DUTY. 

You’ll also have to buy CAR INSURANCE – third party insurance, third party plus fire and theft, or comprehensive car insurance. The main differences are:

  • Third party covers damage to others’ cars;
  • Third party fire and theft adds fire damage and theft to your insurance;
  • Comprehensive covers damage to your own car and other’s cars if in an accident.

Comprehensive coverage is generally more expensive, but covers you in most situations. You’ll have to factor in how much you’re going to pay in excess (the upfront cost you pay for accessing insurance.) Confused? Talk to a broker for more information.

Some of us have been saving for a car since we’ve been kids. For those of us who haven’t, we’ll need some kind of CAR FINANCE, more commonly a CAR LOAN.

A financier, bank or lender will give you the money for a car while you pay it back with interest, expressed as a percentage per annum, or per year.

Sometimes people new to credit products and loans have trouble locking in car finance because they have no credit history. Dealers might offer you “zero percent” finance, which can often lead to making your finances worse off in the future.

You should also know about repayment schedules, fees, charges and loan terms (how long it’ll take to pay off the loan.) If you are unsure, talk to a financial professional to figure out your options. They’re friendly, and help heaps of people in the same position as you! Read our comprehensive car loan factsheet for more information.

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