No-one likes to spend more money than they need to and the same goes when you’re buying a new or used car.

Getting good value when buying a car isn’t impossible, it simply takes doing some homework. We arm you with some helpful tips about the cheapest way to buy a car below.

Stick to your budget

Not everyone will have the spare cash sitting around to buy the car of their dreams, so understanding what your budget is will help to narrow down the available options for your next car.

Ongoing costs, such as registration, insurance, servicing, and fuel

Purchasing a lumpy V8 may sound cool but could be totally impractical for your budget when it comes time to fill up at the servo, get it serviced, or renew your registration. Similarly, a 4WD might be what your lifestyle calls for — but your bank account might call for something with less costly tyres and servicing.

Decide between a new or used car

While a new model, or recently-introduced electric vehicle, can be far more enticing than older vehicles, one of the best ways to save money when buying a new vehicle is to consider used cars.

Pros and cons of new cars vs used cars

Some of the benefits of buying a new car can include:

• New cars come with a factory warranty, covering any mechanical failure in the first few years of the car’s life.

• A new car may be easier to obtain insurance for than an older car with existing cosmetic damage.

• Lastly, who can deny that new car smell?!

Downsides to buying a new car:

• If you’ve heard someone say how much money you lose as soon as you drive a car out of the dealership, they’re referring to the car’s depreciation. Generally, once a car is used, its value drops substantially.

• You may be restricted as to where you can have the car serviced (and therefore potentially be paying more than you can afford) to uphold the new car warranty.

• New cars come at a much higher price point than used cars, which could be out of your budget.

• If there are any faults with your new car, there’s no way to tell, as no one’s driven it beyond small test drives.

The pros to buying a used car

A new car for you doesn’t need to be brand new itself. The pros to getting your hands on a used car for your next vehicle could be:

• Used cars have typically already experienced their sharp, initial depreciation drop, meaning that it may retain the value that you paid for it, for longer.

• Having a previous owner (or owners) could mean that any aftermarket add-ons have already been done (think window tinting, which can cost hundreds)!

• If there were any mechanical ‘teething issues’ from the factory, these have already been dealt with.

Some of the cons of purchasing used vehicles:

• The more aged the car, then the more aged the parts and engine.

• If the car has any existing damage, it may be difficult to source insurance for.

• There are a few extra checks that need to be done before being able to purchase a second-hand car, to give the prospective buyer peace of mind.

Know what to look for in a private sale

If you decide to buy a car that’s being sold privately, this can sometimes help get a better deal, and you often have better negotiating power with a private seller. However, when you choose to buy a car privately, there are some things to bear in mind:

• Whether the seller is selling the vehicle registered or not will determine if it needs to be sold with a roadworthy certificate. If there is no roadworthy certificate, ensure that you always have the car checked over by a qualified mechanic. Purchasing a vehicle with mechanical faults or issues can turn a cheap car into an expensive mistake!

• Particularly if you’re looking at purchasing your car with cash, it’s very important to make sure that there is no finance owing on it. Sometimes, buyers can unknowingly purchase a car while there is still money owing on it from a secured car loan from a past owner. This is called ‘encumberment’. The risk with this is that even if you own the car, if the previous owner doesn’t pay out the loan, the lender can approach you to legally recover the car as recourse for the unpaid loan.

• Know the value of the car by conducting thorough research. Looking around on used car websites or using a service such as Redbook Cars to understand the true market value based on the make, year model and kilometres.

Be firm with the car dealership if you’re trading in

If you’re searching around local car dealerships for your next car, you might consider accessing a better price by trading in your old car. A trade-in on an old vehicle can be an easy and efficient way to switch between your old car and your new car, however, it’s important to know what your current vehicle is worth to avoid being short-changed during the trade-in process.

Avoid unnecessary upselling from car dealers

Similarly, if you intend to go to a car dealer to purchase your new wheels, be mindful of car salespeople upselling unnecessary items or services. There can also be a lot of hidden fees in dealer finance agreements. Between fees and upselling, it can drive the total cost of buying a car through the roof.

Consider: demo cars are often sold at cheaper prices than cars with no mileage — consider asking your car dealer what the best price for a demo model may be, and when it may be available! (Usually, most car dealerships look to sell their demo stock before the end of the financial year).

Do your car loan research

Getting the right car loan is just as important as getting the right car. By putting as much research into your new car loan as you do the car itself, you can ensure that you’re getting the best deal for your needs.

Finance for new and used cars varies. Paying interest is to be expected, however. Depending on who you get your loan through, you may be subject to strict conditions such as the inability to make extra repayments (or pay off the loan early), or you may be slapped with steep admin fees.

Access a specialist bad credit lender if you have a poor credit history

If you have a poor credit rating or no credit rating, the cost of finance for cars can be enormous (not to mention tricky to obtain in the first place).

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.