CHOOSING A CAR

First Timers

After a home, a car is the second most expensive purchase that most people make in their lives. So it's worth putting some time into choosing the right car for your lifestyle and budget, as well as the best finance option for you.

Even if you're a first timer, the information contained in this guide will help you make a final purchase with confidence, knowing that you've covered off the most important considerations, plus a few that are important just to you.

But before you start, it's important to know what you should consider before you decide which car to buy.

  • What about insurance?
  • Can you drive it on your licence?
  • What paperwork will you need to sort out?
  • What can you really afford?
  • How much will it cost to run?
  • How safe and reliable is it?

A happy beginning

You may already have an idea of the car you'd like. But before you start looking, there are a few things you'd do well to consider:

  • The type of car that will best suit your needs
  • Safety and reliability
  • How much you can realistically afford
  • Whether you should buy from a dealer or privately
  • How to get the best deal - our Car Buyer's Tips

What will you use the car for?

Think about why you need a car and where and how far you will be driving it. Do you drive mostly short distances, parking mainly in the city, with only the occasional weekend away? Then a smaller car might work for you.

Or does your work require a long commute with many kilometres on motorways or country highways? In this case, a sedan could be the better option.

Do you expect to have more than one passenger on a regular basis and will you need space for equipment or sports gear? A four-door, or perhaps a hatch or small SUV may be the answer. Also consider if there's likely to be a baby or small children on board in the near future. If you have a young family or are planning one, then you'll need a boot big enough for a pram and room for capsules and/or baby seats.

Which car is best for you?

There are many car manufacturers, types and models out there. So before you actually start looking at cars, it's worth narrowing your choices to the type of vehicle that's best for your situation and budget.

Are you qualified to drive it?

In some states, if you passed your test in an automatic, you'll only be qualified to drive cars with automatic transmission. And if you're a P-Plate driver, in some states your licence won't qualify you to drive high performance cars or cars with modified engines.

Rules on this vary from state to state, so check with the roads and traffic authority in your state, using the links below.

NSW - www.rms.nsw.gov.au

VIC - www.vicroads.vic.gov.au

SA - www.sa.gov.au

WA - www.transport.wa.gov.au

TAS - www.transport.tas.gov.au

NT - www.transport.nt.gov.au

ACT - www.rego.act.gov.au

QLD - www.tmr.qld.gov.au

The power of research

It pays to go online and find reviews that compare the type of cars you're interested in, to see how other people rate them on key issues such as quality, durability, reliability, safety, comfort, economy and drivability. There are a number of useful websites where you can do this.

Choosing the right make

Motor vehicles are constantly evolving, with new technologies, safety features and design elements. It means that today's new cars are more fuel-efficient, safer and offer more exciting extras than models manufactured even five or six years ago.

But some cars offer a little more than others.

Fuel economy

As engine technology improves, cars are becoming increasingly often more fuel-efficient with fewer harmful emissions than older cars. In the case of some Hybrid cars, fuel consumption and emissions can be effectively reduced to zero when waiting at lights or driving in slow stop start traffic. Hybrid refers to vehicles powered by a combination of electric motor and petrol engine or electric motor and a diesel engine.

Over time, even small savings in fuel costs can make a big difference to your running costs. So when you compare makes and models, make sure you check fuel performance for the type of driving you will be doing. You'll find fuel consumption figures for most new cars on manufacturers' websites. It's also often included in individual car reviews.

Safety first

Safety on the road is a major priority, especially for new drivers. To keep you as safe as possible on the road, many cars are now designed not just to help protect occupants in an accident (for instance with multiple airbags and crumple zones).

They are also equipped with technologies and innovations such as traction control, anti-skid braking, radar cruise control, blind spot monitors, reverse cameras, and audible alarms, to help reduce the chance of accidents occuring in the first place.

ANCAP (Australian New Car Assessment Program) safety ratings for new cars can be found at www.ancap.com.au.

You'll also find UCSR (Used Car Safety Ratings) ratings for used cars here: What is UCSR?

Once you've worked out the type of car - hatch, sedan (saloon), manual or automatic, etc. - and narrowed your list of models down to 3 or 4, you can start your search in earnest.

Setting a realistic budget

Whether it be your first car, second car for work or recreational use, it's important to work out what you can realistically afford. Remember the 'drive-away' price may be significantly higher than the recommended retail price (RRP) as it will include tax, CTP and registration fees, a delivery charge and the cost of any add-ons you select. (Depending on the model you choose, add-ons may include features such as alloy wheels, moonroof, satellite navigation[N1] and climate control.)

In the long term, you will need to allow for fuel and running costs. A small difference in fuel efficiency between models can add up to a big difference in costs over time.

Servicing costs can also mount up, so it's worth checking whether affordable, capped price servicing is available. (With some previously owned cars, fixed price servicing packages can be transferred to the new owner.)

If you are using finance, you will also need to allow for interest payments as these will add to the overall cost of your car.

Finance options

If you decide to use finance to pay for your car, there are various options open to you.

A simple and convenient option is the dealership. Backed by banks and major finance institutions, dealers can offer you a range of finance packages even on cars up to seven years old.

They may also arrange finance protection insurance for you.

You could choose a straightforward loan or lease agreement or you may be able to organise a novated lease through your employer or through your local franchised dealer.

Novated leases are potentially a tax effective way to own a car. Before entering into a novated lease arrangement you should obtain financial or taxation advice regarding your personal financial circumstances.

Running costs

The cost of fuel, insurance and servicing all add up. So you need to budget for these too. Dealers can provide you an overall view of running costs including quotes on insurance.

Insurance companies calculate your premium based on the kind of car you drive, your age, where you live and your driving record.

It's a good idea to look for car makes that have a reputation for reliability and low servicing costs. Not only will maintenance be cheaper, but certain makes tend to hold their resale value better than others. Some manufacturers offer capped price servicing schedules on new cars. These can be cost-effective, and will also help your budget planning.

Buying privately or from a dealer

If you decide on a new car, you'll need to buy from a dealer. A used car can be bought from a private seller, at auction, or from a used car dealer. Some key advantages in buying a new car include:

  • You can choose the exact specification and colour you want
  • You can benefit from the latest advances in fuel efficiency, safety and design
  • As the first owner, there are no secrets about the car's history, so you know what you are buying
  • Many dealerships offer manufacturer-supervised capped price servicing deals
  • Dealerships often have special offers and finance deals which can sometimes save you money

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