Finance - General Advice: Buying a Car
For many students a car is their first major acquisition and represents an important decision in life - a decision that requires careful consideration and another necessary evil - money.
So you have decided that you want to buy a car, either your first car or you would like to upgrade the one you have. Like most students you don't have a lot of money so a new car is probably out of the question.
There are still several options that you can consider. These include; licensed traders, private sales, and auctions.
Firstly, you need to decide how much you can afford (Refer to Budgeting section. It is important to remember that the purchase price is just the starting price of calculating the cost of a car. You will need to allow money for associated costs, which include transfer fees, stamp duty, insurance, running costs, repairs and servicing.
Once you have decided whether you can afford to buy and maintain a car, you will then need to decide where you are going to purchase it from.
1. Licensed Motor Car Trader (LMCT)
Buying through licensed traders may be more expensive but it offers you greater protection:
- There is a cooling-off period, usually three working days, if you decide to change your mind.
- If the car is not more than 10 years old and has travelled less than 160,000km, it will be covered by a Statutory Warranty. The warranty lasts for 3 months or 5,000km, whichever occurs first. This means they must repair any faults during the warranty period so that the car is in a reasonable condition relative to its age.
- You will have a Clear Title, guaranteeing nobody else owes money on the car.
2. Private Sale
This is buying a car directly from the owner. It is often cheaper than going through an LMCT. The weekend newspapers, Trading Post ® Classifieds and www.carsales.com.au contain lists of cars for private sale.
With this method of purchase you generally have less legal protection. For instance, there is no cooling-off period, the car is not covered by a Statutory Warranty, and it is your responsibility to ensure that the vehicle has a clear title. You can however cover yourself in these matters by doing your research. The RACV is great place to start.
3. Auctions
Buying a car at a public auction is similar to buying privately. In addition, with most public auctions it is not possible to test-drive the car or even start the engine. So if you are thinking about purchasing at an auction take care. If possible, take a motor mechanic or someone who knows a fair bit about cars and have the car inspected prior to the auction. You will be required to obtain a roadworthy certificate before the car can be transferred into your name.
While buying a car at an auction can be cheap, it does carry risks, and you need a great deal of experience to avoid buying a troublesome car. You will need to make a deposit of about 10% or $500 for the car if you are the successful bidder. Payment may be required in full on the day of the auction or the following day.
So before purchasing any vehicle do your research carefully before you hand over any of your hard-earned dollars and have a checklist when shopping for a car.
Free2Go is a motoring assistance program especially for young people aged 18-20. Membership benefits including free and discounted Roadside Care.