Basic training: How to buy your first car

There are a range of things to consider and research before buying your first car.

Buying your first set of wheels is likely to be one of the most exciting purchases you'll make.

But while it brings the promise of freedom and adventures, it's important you don't rush in and wind up with a lemon, or a bad loan.

Here are a few things to consider:

Setting a budget

"The excitement of buying a car can get in the way of making good financial decisions," says Miles Larbey, a senior executive leader in financial literacy at ASIC.

Before hitting the car yards, do some research and figure out what you can afford.

Aside from the car's price tag, factor in registration transfer fees and stamp duty, which vary from state to state. Then there are ongoing costs such as petrol, maintenance, roadside assistance, insurance and registration fees.

New or second-hand?

Don't forget that shiny, brand new car is a depreciating asset that will lose value the minute you, and it, leave the car yard. Opting for a good quality second-hand car means you'll save cash for other expenses such as insurance.

Where to buy your wheels

There are pros and cons to buying a car from a dealer, auction house or private seller, says Larbey.

But he says while you may nab a bargain at auction or get a cheap car privately, there's no warranty, and you'll need to rely heavily on your own judgement.

If you're buying second-hand, make sure you do an ownership check using the Personal Property Securities Register.

Avoiding a lemon

Spending a few hundred dollars on a professional inspection may save you later. Check how many kilometres are on the odometer, and that they match the car's service history.

Buying outright versus loans

Paying for your car outright will always be cheaper than buying it on finance, says Larbey.

"If you do need to take out a loan make sure you shop around. Car yard finance is normally more expensive than getting a loan from a bank, building society, credit union, or other lending company."


While compulsory third-party car insurance is mandatory for every motor vehicle registered in Australia, this will only cover injuries you may cause to other people in a car accident, says Larbey.

"It will not cover damage to property or vehicles. Would you be able to afford the repairs to a luxury sports car if you crash into one?"

For more tips on buying your first car, visit ASIC's MoneySmart website.

This article was originally published by the Sydney Morning Herald on 4 September 2015. This article represents the views of the author only and does not necessarily reflect the views of AMP.

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.