Common car-buying mistakes

We want to help you avoid some common mistakes people make when buying a car.

Instalments vs total cost

Make sure you're looking at all the elements of your financing decision so you don't lock yourself into a larger debt than you can afford.

Consider new and used

In one ear you’ll hear ‘you should never buy new’ and in the other you’ll hear ‘you’re a fool to buy used’. Taking either position as true can lead to many missed opportunities, so it's important to always evaluate your options.

As with everything, your best course of action will depend entirely on your required outcome. For some people, the best possible option will be a new car off the showroom floor, regardless of its immediate dollar depreciation. A new car would suit you if:

• Peace of mind is important to you - knowing the cars history and having to worry that it’s been in an accident or serviced infrequently
   
• A hassle-free warranty
   
• New car smell
   
• Up-to-date technologies
   
• Ultimate fuel economy. 

For others, a car that is a year or two old will tick all the boxes... The original owner will have taken the initial depreciation, but it's likely the car will still be in excellent mechanical condition, part of the warranty still in-tact. 

There is no one true mantra when it comes to the age old new-or-used debate. Anyone who tells you otherwise likely has their own agenda. As long as you compare your requirements to the benefits (and drawbacks) offered by each option, you will avoid making the wrong choice for you.

Buying the wrong car for your driving

For most people, buying a car is a big deal. It’s a big ticket item that we don’t purchase often. That’s why it’s so important to buy a car to suit you and your needs. 

Instead of playing a functional and reliable role in your life, the wrong car can create a real headache. You loved the sporty looking coupe in the showroom, but the reality of squeezing two kids in the back and lugging a boot-full of groceries kicks in and your beloved set of wheels is proving a real pain. You had a great time test-driving the beefy 4WD on the weekend, but trying to park it in the City for your 9am Monday morning meeting is nightmare.

On top of your functional requirements, there’s the way your car makes you feel. Cars do much more than simply transport us from A-to-B; they say something about who we are. Just be realistic when defining your needs, and then balance them against your personal tastes.

Conveniently forgetting all the extra expenses

Few feelings are worse than realising you've just signed your name to something you can't afford.

When considering your budget and the cost of a car, you need to allow for all costs, not just the drive-away price or repayment amount. The other big ones to remember are:

• Insurance – the general rule here is that the more you spend on your car, the steeper your insurance quote is likely to be.
   
• Maintenance – second-hand cars may require more mechanical work, parts for rarer or overseas models may be expensive, and there can be work not covered by warranty that you didn’t expect.
   
• Fuel – the larger the car, the bigger the fuel tank, the more it costs to fill. The more you drive, the more fuel you need. It seems obvious, but don’t forget, petrol is pricey.
   
• Registration – it’s a recurring cost that always seems to creep up on you. Each state is different, but you need to be aware that this is another unavoidable car-related expense.

Putting $0 down on the finance

Nothing in life is free. Especially finance. The second you drive your $20,000 car off the lot, it’s no longer a $20,000 car. That means within 10 minutes of getting the keys, you owe more on it than it's worth.

This is bad news if you want to get rid of it before you've paid off your debt, as you'll be paying for the gap out of your own pocket. Just keep this in mind when you decide to finance the entire cost of the car. Even a small deposit can help you manage your new debt.