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Buying a car?

Buying a car?

Buying a car, whether new or used, is one of the biggest purchase most of us will make in our lifetime, second only to buying a house.

And with so much to consider; from finding a model that best suits your needs and financing it, to decoding acronyms, such as MRSP  (that's the manufacturer's retail suggested price to you and I) and getting insurance, it’s natural to feel overwhelmed and confused.

To help you navigate through the detail, we’ve compiled 10 tips to ensure you choose the right car and negotiate the best deal.   

Determine your budget

You may want to buy a car, but you won’t be able to if you can’t afford it.

If you’re planning to finance, check your credit score before you start shopping, as this will determine the rate you pay on a car loan.

From here, work out how much you can comfortably afford and you’re maximum budget.

Unsure if a car will fit into your monthly expenses?

Use the NRMA car loan calculator to determine your monthly bills and necessary savings.

Buy a car for your lifestyle

Far too often, consumers buy cars that are impractical or beyond their budget by getting caught up in the moment or sales pitch.

Avoid this pitfall by establishing a set of imperatives before visiting the showrooms.

Think about what you’re going to use the car for and features most important to you, for example, how many seats do you need or is fuel economy more important than performance?

If you’re regularly ferrying a young family of five and fitting baby seats, a two-door coupe isn’t going to be practical day-to-day.

Similarly, if you’ll spend most of your time driving long distances, towing or with the full family on board, a diesel car may be a more fuel efficient choice.

Do your research

Knowledge is power.

You can find out just about everything you want to know about a car online.

Explore car features and learn the total cost you will have to outlay to drive the car on the road by visiting the manufacturer’s website if you’re buying new.

Buying used? Read up on car reviews and check out NRMA Carhistory, noting MSRPs and invoice prices.

Speaking of which…

Have a maximum purchase price in mind

If buying a used car, a manufacturer’s suggested retail price (MSRP) is what the dealers want you to pay.

The invoice price is closer to what the dealer actually paid for the car.

A fair price or market range is just above the invoice price.

Note, this price doesn’t include stamp duty, dealer delivery costs, CTP Greenslip; all costs you need to pay to drive the car out of the showroom.

Consider cost of ownership

Keep in mind the long-term costs involved when choosing a car, as expenditure doesn’t stop at purchase.

Calculate how much you will spend on fuel based on the number of kilometres you drive annually and how much servicing costs will be.

Include your monthly repayment (if using a loan), as well as an insurance quote on the car you are considering that applies to all drivers in your household.

Lastly, add to that any potential repairs, should you decide to keep it beyond its manufacturer warranty.

An easy check is to read the servicing booklet, which outlines what's required at each service so you can budget for it in advance.

When to visit a dealership

Know when to go.

Dealers usually have weekly sales target that they have to put in every Monday mornings, making after lunch on a Sunday a good time to especially if the the dealer isn't on target. 

Better yet, visit in the last few days of the month or year – particularly end of financial year, when they’re eager to hit their sales goals. 

Take a test drive

An obvious one but, considering most car owners keep their cars for five years or more, a proper test drive is important.

Get a feel for the interface and operation – adjust the seats, experiment with the controls, and how the car drives.

If you need it, don't hesitate to ask for more time behind the wheel.

Listen for any creaks and rattles and check to make sure there's no smoke coming out of the exhaust.

Think about everything you’ll be using it for, drive in familiar surroundings and try to test it doing your everyday errands, for example, the school run. 

Be prepared to haggle

Whether you’re buying from a dealer or private party, be prepared to negotiate.

Use Glass’s Guide or Redbook to compare prices for new or used cars. 

These resources reveal what people have paid for the same type of car in your area, giving you a better idea of the target range to aim for during negotiations.

Glass’s Guide, for example, will give you an idea of how much you’d expect to pay for a car that is not in good condition with high kilometres compared with a car that is in good condition and with low kilometres. 

Have more than one option

It’s difficult to stay emotionally detached from the process of buying a car – most of us have decided what we want long before the test drive and the nitty gritty of finance.

Don't forget to shop around among dealerships, which will often use rebates and other incentives to compete with each other.

You could look at the same car at three different places and get quoted three different prices.

Avoid added extras

It’ll come as no surprise that the dealer is going to try and sell you extras with your shiny new car.

Once you've reached an agreement to buy, be prepared to say "no" to all the extras you may be offered, and do research at home for whatever add-ons interest you.  

A quick online search will turn up a number of companies that can offer you better value for money.

A classic example is paying for extra rust protection which is very rarely needed, unless you live in a place where it snows a lot or you spend a lot of time driving on the beach.

Finally, remember you’re under no pressure to buy a car, especially from a particular dealer right away. 

Virtually any deal you negotiate today, you'll be able to negotiate tomorrow, or a week from now.

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