Make upgrading your car worth a while with these 5 tips

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 August 2nd, 2023       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

Upgrading a car can be both a fun and challenging time for anyone. Perhaps it has been long overdue as you look at your car that is literally holding on for dear life, or you finally have the finances to upgrade to something that is not a fuel guzzler, looks good and feels good under your hands. Before you hit the dealers looking for a car here are five tips that will make you and your pocket smile.

1. Cars depreciate…really fast

Not to put a damper on the prospect of getting a new car, but it is important that you know that cars depreciate very quickly. The minute you drive your car off the lot it loses 11% of its value and can lose 30% in the first year. When it boils down to it your car needs to fit your needs and finances. As much as we would like to ride in the latest Mercedes C-class or a BMW M3 range, it needs to be practical and also financial savvy for you. You will have to keep in mind the cost of maintaining the car, how it will affect your insurance and whether it offers you value for your money.

2. Think about your financing options

Even if you have purchased a car before, always evaluate your financing options. According to the Royal Commission, 90% of finance is arranged through finance of which 39% are financed through dealers and 61% from other sources such as banks and private lenders. Try to avoid going to a dealer without having pegged this tip down or you could end up being pressured by sales talk that sounds good, but on closer inspection is more expensive than you anticipated. Whether you are opting to get your financing from a lender, bank, or even a dealer it is vital that you compare your options before settling.

3. Rates and terms

This might appear as a snooze fest of going through the detail of your financing option when you just want an upgrade to happen as soon as possible. However, checking the rates and terms of your loan will let you know whether you are taking something that can be strenuous on you financially or whether you are getting the best deal in town. Low rates don’t always mean you are getting a good deal, that’s why you need to read the fine print and know what you are getting yourself into.

4. Do you have your 20% ready?

It is advisable that you have at least 20% of the deposit ready to finance a car. The reason for this is that it will lower the amount you will need to borrow which in turn makes your loan term shorter and lowers your repayments. If you do not have 20% of the deposit saved up this could be a sign that you are not ready to upgrade to a new car just yet.

5. New vs used

To purchase a new or a used car? Now that is the question. This is the defining factor that will influence how much you prepare financially and what type of models you can choose.

Although new cars can lose thousands of dollars in value the moment you drive it off the lot, it has low maintenance costs and is far more reliable than a used car.

But you can also still get the best quality used cars that are 2-3 years old which is almost as good as new. Which one you decide on will be determined by your situation.

Easily compare car loan quotes today

Our car loans take your money further. See how you can compare and save with us.