What Should I Consider When Buying A Car?

Our comprehensive guide on What should you consider when buying a car.

No obligation. It won't affect your credit score.

Last updated on April 19th, 2022 at 02:26 pm by Thomas Perrotta

After your house, buying a car is one of the biggest expenses you’ll probably ever need to deal with, so Savvy has put together a useful guide about what to expect. When you’re making a relatively major purchase, it’s important to keep an eye on all the associated costs, or things can quickly get out of hand – and a lot more expensive than they need to be. In this article, we’re going to look at every aspect of buying a car, whether that’s new or used, from a dealership or by private sale. We’ll start right at the beginning and show you how to plan for your purchase; then, we’ll go through what happens when you inspect vehicles and talk you through raising the money to suit your budget. You’ll read tips on qualifying for car finance, money-saving hints, and learn how to avoid buying a lemon.

What should I consider when buying a car?

The aim of this guide is to help you save money and maximise your chances of buying the car that you need – without wasting any money. Here at Savvy, we hear from thousands of vehicle buyers each year, and we help all sorts of people to navigate the process of getting on the road as cheaply and as quickly as possible. One of the most significant costs, when you’re buying a car will be finance, but you can save money by ensuring you follow Savvy’s helpful guidelines. Savvy customers regularly save thousands of dollars on car finance because we offer more choice, a greater selection of products and options, and we have long-term relationships with dozens of Australia’s top car finance providers – so you’re in a good place to start saving money and drive a real bargain.

What should I consider when buying a car from a dealership?

When you’ve decided on the car you want, make sure to negotiate. Remember that if you don’t ask, you don’t get. It’s better to walk away from a dealership with a no than it is to regret not asking the question. There’s nearly always some wiggle room in the asking price of a car, and you could get lucky and find a salesperson that needs to hit a target or wants to make some room in the showroom. Even if you can’t get the salesperson to reduce the price, try asking them to include on-road costs or extra options.

  • Be sure you’re 100% clear what any deal you’re considering includes before you sign off on it. Is stamp duty included, and what about delivery, and any paperwork or administration fees? If you’re not using dealership finance, make sure the deal isn’t dependent on that.
  • When it comes to signing on the dotted line, be very careful to read the entire contract of sale, and don’t even consider buying until you’ve got cast-iron guarantees of any extra features and concessions you negotiated earlier. Make sure you’re happy with all the terms and conditions of sale and that you’re satisfied any warranty you were promised is included.

Is it better to buy a new or used car?

Every car buyer out there is different. The fact is that the best car for you is the best car for your needs. The kilometres you cover is probably one of the most important factors in deciding which vehicle you should buy. Cars lose a lot of their value early in their life. A new car that costs $50,000 might be worth $25,000 when it’s three years older. If you only drive 5,000km each year, is a new car really worth the depreciation risk, and will you be getting the full benefit of a seven-year warranty? If you only cover 35,000km during that period, it’s unlikely. Here’s what a secured car loan for each of those vehicles would cost over five years:

Loan Amount Term Monthly payments Total interest Total payable
5 Years
5 Years

On the other side of the coin, if you do a lot of driving for work and live in a remote area where you need to use a car for everything, you might clock up 40,000km every year. That’s when having a full, comprehensive mechanical warranty could be worth it – and it could save you a lot of money if you upgrade the vehicle every few years. If you look at depreciation in terms of dollars per kilometre, it costs far less when you drive farther each year.

0% interest rate loan

0% interest rate car loans sound very attractive. However, you should watch out for the car price. Sometimes, 0% interest rate car loans can come with a mandatory higher car cost (no haggling allowed).

Assuming your dealer can offer you a 0% car loan with the amount financed (car price and dealer fees) $39,000 while your car finance broker offers you a 4% car loan. Through the broker however you are free to negotiate a better deal with the car dealer, as an example you might be able to now get the amount financed at $35,000.

5 year car loan Dealer Broker
Interest rate
Amount financed
Fortnightly repayment

Buying a used car checklist and tips

Frequently asked questions on car buying

Is it cheaper to finance a new car or an older one?

Generally, yes. Lenders charge slightly higher interest rates for older cars than they do for new ones. That’s because all lending gets charged based on risk. Late-model cars are less risky for loan providers than older models.

Can I get my loans approved before I shop for a car?

Getting pre-approved for a car loan is an excellent idea. Pre-approval just means you supply all your information so we can get you cleared for a certain amount of borrowing ahead of actually signing an agreement. That puts you in a better position when it comes to negotiating with a dealer or private seller – because you know precisely how much buying power you have. It’s as good as having cash in your pocket

Are third-party car inspections worth it?

In most cases, yes. Even if your car comes with a warranty, the last thing you want is to be off the road because of one-off or repeated mechanical problems. An expert third-party inspection means you’re not relying either on the word of the seller or your own ability to find faults. If you’re lucky enough to have a friend or family member that’s handy with cars, you can ask them to come along to an inspection.

Should I get a vehicle history report?

Vehicle history reports – also known as PPSR REVS certificates – are also a great idea when you’re investing a relatively large amount of money in a car. They tell you if the vehicle has ever been written off, and if there is any outstanding finance against it. If you don’t bother getting a vehicle history report, you could be at risk of losing your new vehicle in the event that a previous owner failed to pay off finance secured against the car.

Do I need a car warranty?

Car repairs can be extremely costly, so warranties provide great peace of mind. Late-model cars with remaining manufacturer warranty certainly have the edge when you’re shopping for a vehicle – but you should consider other factors like mileage and condition too. Some second-hand car yards offer their own warranties, but it’s important to read the small print because they’re all different, and they could have specific conditions.

How much do I need to budget for car insurance?

Using secured car finance means it’s absolutely crucial you budget for fully comprehensive insurance. That’s because if anything happens to the car – if it gets stolen or you’re involved in an accident, you won’t want to end up owing a lender money with nothing to show – and no way to get around.