5 Traps to avoid when buying a carBuying a new car seems simple enough. You source financing, find your dream ride and hightail it out of the dealership. Yet rarely is the process this straightforward.
Regardless of whether you’re buying a new or used vehicle, it’s important to do your research and avoid any heat-of-the-moment purchases. Bessie Hassan, Money Expert at finder.com.au, shares the five most common traps to avoid when buying a car.
Not doing your homework
Cars are a big investment and carry expensive running costs. They also depreciate in value the moment they leave the showroom. Research is essential if you want to end up purchasing a reliable car that’s going to retain as much value as possible.
Important things to, look for are a vehicle’s fuel economy, general resale value and safety rating. ANCAP provides safety ratings on vehicles manufactured from 1993 until now. If you’re purchasing a second-hand car, remember to check the log book and assess the vehicle’s history through the NRMA. Ensure the car is up to date with servicing and free of any underlying mechanical issues.
Failing to sort your finances
For those who don’t have enough savings to purchase a car outright, a car loan can be a good way to pay off a vehicle in ongoing instalments. But not all car loans are created equal. You could be facing thousands of dollars of difference between dealership financing versus a car loan with a bank or lender.
Buyers often succumb to dealership financing amid the pressures of the showroom. Finding the right car is exciting, and it can be convenient to get everything sorted in one place. Yet dealership loans usually charge a higher rate of interest, which adds up significantly over time. Taking out a loan with a bank or financier allows you to drive away with a better rate and to pay back your debt in more manageable increments. Getting pre-approval for a personal car loan also gives you a realistic budget to work with, so you won’t end up with a car you can’t afford later down the track.
Only visiting one dealer
Just because you’ve gone through a particular dealership before doesn’t necessarily mean you’re getting the best offer. Loyalty doesn’t always pay off when purchasing a car, and it pays to know what else is available.
Most dealerships promote their best offers online, which makes it easier to compare your options across multiple sellers. Try to visit two to three dealers if possible. This will give you a good indication of what you should be paying and help with negotiating a better price for your vehicle.
Skipping the test drive
A car might look good, but it’s important to get a feel for how it runs by taking it for a spin, especially if you’re looking at second-hand models.
There are a number of things to check for when test driving a vehicle. You should be able to change gears smoothly and efficiently. Ensure the brakes are responsive and all interior and exterior lights work. Listen for any irregular engine noise and make sure the car tracks in a straight line and doesn’t veer slightly to one side. Check the car’s oil and water for any leaks. After you’ve gone for a drive, let the vehicle sit for a few minutes before making sure there aren’t any oil drips coming from the motor.
Underestimating ownership costs
Buyers are often blinded by a vehicle’s selling price and forget to consider all the other costs associated with car ownership. When working out a budget, remember to include car insurance. This is essential if you want to protect your new ride out on the road. Consider how much you’ll need to set aside for fuel each week.
If it’s a second-hand car, make sure to check the rego expiry date, along with any upcoming services or routine maintenance that may be required in the near future.
Bessie Hassan is the Money Expert at finder.com.au
DISCLAIMER : The thoughts and opinions conveyed on this website are those of the authors only and are of a general nature. This does not constitute financial or general advice to you from Auto Loans Group. You should seek your own independent advice from a professional which is specific to your circumstances before considering any of the items referred to in this article, including finance, insurance, and car buying.