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Buying A New or Used Car

Australian Car Market Summary

Until quite recently the car market in Australia was dominated by mostly Australian built (GM Holden (Vauxhall), Ford, some Toyota and Nissan models) Japanese made (Toyota, Nissan, Subaru, Mitsubishi, Mazda, Daihatsu, etc) and South Korean made(Hyundai and Kia) cars. As there was an import tariff for overseas made cars where no trade deals existed with Australia, making German and other imported vehicles comparatively expensive. Due to gradual reduction of import tariffs for new cars in the last few years there has been a dramatic increase in the sales of German, French and other brands and it is quite common to see Audis, Mercedes, BMW, Peugot and others on the roads as their prices have reduced significantly.

It can still be very expensive to service and find spare parts for these “newer” brands due to their still limited dealer network (and some monopolies) and many people opt for Japanese and established brands as a result as these tend to be much cheaper to service, have a more extensive dealer network (including some dealers in country towns) and access to cheaper and second hand spare parts. Due to their more established history in Australia, it is also much easier to have your car serviced outside of the franchise dealer network too, whereas with the European brands this is generally not possible.

Research Before You Buy a Car in Australia

Print media (newspapers) have seen a 60-90% reduction in advertising of cars (new and used) for same due to the rise in popularity of online media and internet sales platforms, dealers have also finally embraced the internet as the main location to promote their sales stock and have mostly updated their websites and they are not much more user friendly and easier to navigate than they were. There are still a few exceptions though and these tend to be the smaller and less progressive dealers.
This means it is easy for you to get a good idea on the sales prices for different makes and models as well as being able to establish what you can get for your budget.
It is therefore a great idea (if you haven’t already done so) to check out the models and prices for the cars you are interested in online before you have to visit the dealers. This will mean you can do some research without being “sold to” by a salesman who earns commission for each car they sell. The shift to online advertising also means that >80% of cars for sale are now advertised online as opposed to in the print media (newspapers). The two major car sales website where new and used cars are advertised by approved dealers and private sellers are Carsales and Carsguide.

As mentioned earlier it should also be an important part of your research to enquire about servicing costs as these can vary from around $200 for a Japanese brand to over $1,000 for a comparative European model. Some makes also offer capped price servicing (for brand new cars) that forms part of the sales agreement and means that the price for a regular service is fixed for generally the first three years of ownership. It may also be a good idea to ask about additional or regular service costs (once the capped price agreement ends) if you intend to keep the car for longer.

Insurance costs

These can also vary from make to make and for different models too as high performance, super- or turbo charged cars can often be much more expensive to insure as can 4 wheel drives and SUVs. Also check on off-road cover for 4×4 vehicles if you are planning to explore. Warning, if you have imported your vehicle from overseas or you know that your new purchase is an unofficial import (also called “grey import”) be sure to tell the insurance company as most companies do not insure vehicles that weren’t officially imported to Australia by a manufacturer; you may not be covered if you need to make a claim.
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Tips And Guidance For Buying A Car

Buying a new car:

New cars are sold by manufacturer approved and state government licensed dealers and are generally covered by a minimum statutory new car warranty for 12 months or 20,000 km, most brands include a 3-6 year and 60,000 – 160,000 km new car warranty that commences from the date the vehicle is first registered. The warranty usually covers repair or replacement for everything except items that normally wear out, such as tyres, batteries, oil and other lubricants, brake pads, and items replaced at a scheduled service.
The price you pay for a new car includes the car purchase price, goods and services tax (GST), stamp duty and vehicle registration costs. The purchase price usually includes GST and luxury car tax (currently 33% for vehicles where the selling price including GST is over $61,884) and if the price quoted is “drive away” then it also includes stamp duty and vehicle registration fees, otherwise these need to be added.

New Car Buying Tips:

The price quoted by a salesman or a dealer is usually negotiable.
If you aren’t too fussy about colour and are happy to take a car from current dealer stock – you generally get better discounts towards the end of the month as long as the new car can be delivered before the end of the month as sometimes the sales manager is chasing a target and needs some extra sales.
End of financial year (30 June) deals can be attractive as often the dealers get discounts or financial incentives from the manufacturers for the end of the financial year.
During the sales process you can make an offer for the amount that you are happy to pay for the vehicle.
You should start quite low without being unrealistic and don’t necessarily take the salesman’s word if they say the offer is too low as they are often paid commission based on the profit made on the sale.
New cars typically have a 10-20% profit margin and sometimes higher for luxury vehicles and less for some of the cheaper brands and models. The idea is to make a written offer of around 15-25% less than the asking price and gradually increase your offer until it is accepted by the dealer (usually by the sales manager on the dealer’s behalf). Once your offer is accepted and signed by the relevant manager then it becomes legally binding and you are obligated to take delivery of the vehicle and pay the price agreed. It makes sense to place some conditions on the offer that will become the contract of sale, such as “subject to finance to the purchaser’s satisfaction” even if you are paying cash, this gives you the opportunity to break the contract if you decide not to proceed with the contract. It also gives you the chance to source the best finance deal if you need to arrange financing – see the car financing section below for more tips on this.

Buying a Used Car

Beware of buying a used car on the internet from sites such as Gumtree or Ebay as scammers often use these sites to lure unsuspecting victims. It is also worth noting that cars bought privately that are no longer covered by a manufacturer’s warranty are not covered for any mechanical problems after you have taken possession and the seller has no obligation to fix or rectify any issues. Australia has laws protecting consumer rights, the Australian states and territories also have their own consumer laws protecting you and goods that you purchase, this includes buying a motor vehicle from a new or used car dealer – though generally doesn’t extend to private sales. Carsguide’s 10 tips for buying a used car also has some useful information.
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Getting Car Finance

This is an area where migrants tend to get stung, so take note! Firstly, it makes sense if you have a job and therefore qualify for car finance, to do so rather than use equity from the sale of property to pay cash for a car as this can be put to use towards your new Australian home purchase instead. As much as car dealers want us to believe that a car is an asset, it isn’t, they cost money to buy, run, service and maintain and depreciate in value, it doesn’t make sense to use money that your built up in property on a car that is worth less every day you own it.

Don’t sign up for finance at the car dealer, at least not at first anyway, the dealer and finance manager get paid commission based on the interest rate they convince you to take. The higher the interest rate, the more they get paid (at your expense). Instead, ask the finance manager at the car dealer for a written quote or a quote for what interest rate they can offer. Then contact your Australian bank, asking if they offered secure car loans (as not all do and not an unsecured loan as the interest rate is higher for unsecured loans). Establish what interest rate the bank can offer for a 3-5 year secured car loan (5 years is the most common). Then contact the finance manager at the car dealership and ask them to better the bank’s finance offer to win your business, this way you will get a better finance deal and be able to pick up your vehicle quickly as the paperwork is generally much quicker than the banks’.

The finance manager may also try to sell you loan protection insurance, so be sure to ask if any insurance premiums are included in the finance and only take those insurance products that you are comfortable you need (if any). Also ask the dealer for a car insurance quote and compare this to your own quotes as some manufacturers can be very competitive with comprehensive car insurance. Read your finance contract carefully before signing anything too, to make sure there aren’t any unexpected costs or surprises.

Click to Continue to the next section (Drivers Licence).

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