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BSB 806 015
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& My money

Buying your first car

Young man sitting in the driver's seat of a car

Whether you’ve only just passed your test or have been sharing a car with a family member for years, it’s an exciting time when you decide to purchase your first car. It can also feel pretty overwhelming, especially with the number of options available and, of course, the cost! We’ve put together some tips to help guide you through the process of buying a car (used or brand new), so you can ensure you don’t forget anything important.

How much will it cost?

Before you even start scrolling through websites or visiting car yards, you need to know how much you can afford – and it’s not just the cost of the vehicle that’s important. Think about the additional costs that come along with owning a car, such as motor insurance, registration, loan repayments, fuel and servicing costs. A few searches online will likely give you an idea of the costs to expect, and many of the motoring clubs across the country publish regular ‘car running costs’ research to help drivers budget and purchase wisely.  

If you have a savings goal set for your motor purchase, then make sure your savings account is working hard. Look for competitive interest rates and even bonus interest offers, and if you’ve already saved a chunk of cash, you may find a term deposit can give your balance a boost.

Car loan

Saved enough to buy a car outright? Great job! If not, don’t panic. If you’re 18 or older, then a personal or car loan could help.

It’s a good idea to thoroughly research and compare your finance options. If you decide to purchase your vehicle through a dealership, it’s likely that they will offer financing to assist you with your purchase. Make sure you’re across all the details and the terms because you may be able to find a more affordable option from a bank or lender instead. Make sure you ask the dealership about any fees; this could be monthly or yearly fees, early exit fees or administration fees.

The dealer may also offer a car loan with a balloon payment. A balloon payment is a lump sum of money that you, the borrower, will pay at the end of the loan term. This means that the regular repayments prior to the last payment will be lower as you are required to pay a larger amount at the end of the loan term. This can be a good option for those drivers who want to trade-in or sell their car at the end of the loan term. However, keep in mind that the car value will depreciate as time goes on, so the large payment at the end of the loan could end up being more than the car is worth!

Our personal loan repayment calculator tool can help you see how much you can afford and how long it will take you to pay off a car loan. Plus, the P&N Bank Car Loan offers a fixed low interest rate, flexible repayment options, no fees, and a redraw facility.

You may find it beneficial to have done your finance research before going to a dealership or car yard. That way you can be clear and upfront with the salesperson about how you want - or intend to - finance the car and potentially avoid their in-house finance sales pitch.

New or used?

You may have already decided which option is for you when you’ve weighed up what you can afford. But, there is a lot more than the purchase cost to consider when it comes to choosing between purchasing a new car or a used one.

A new car won’t have a ‘history’. That means you won’t need to worry about any mechanical problems or any outstanding debts or infringements that are linked to the vehicle. It also means that you’ll benefit from a manufacturer’s warranty, which can offer you peace of mind during the first few years (or a certain number of kilometres).

Another benefit of opting for a new car is that the “drive-away” price is inclusive of any government charges. Buying a used car will incur government charges that you will need to pay later (such as vehicle licence duty). This can be costly, so it’s worth checking this out before deciding on new or used.

When it comes to a new car purchase, you will also need to keep up with regular services. Most warranties are only valid if you get your car serviced regularly and record the details in the car’s logbook.

Used cars are generally cheaper than a new model – unless you’re buying a vintage beauty, of course – but there may be added upkeep costs associated with owning an older model. It’s important you get an inspection done on any used car you’re thinking about purchasing and review the service history, whether you’re purchasing from a dealership or through a private sale. 

You should also do a thorough check of the ownership history. After all, you won’t want to find yourself as the owner of a vehicle that has outstanding debts attached to it. To learn more, visit the government’s Personal Property Securities Register website.

Think about insurance

You can be the best driver in the world, but when you’re on the road you can’t control other drivers or their vehicles. By taking out motor insurance, you’re helping protect yourself from any future incidents that could occur on the road.

There are different levels of car insurance, so before purchasing ensure you understand the differences and consider what type of policy will suit you, your vehicle and your budget. Bear in mind that the car you choose will likely influence the price of your insurance premium. For example, age, engine size and fuel type can all be factors considered by the insurer. And, if you’re taking out finance on your new car, be aware that you will likely be required to protect your new vehicle with a Comprehensive insurance policy.

To learn more about car insurance, read our Car Insurance Explained article.

If you’re thinking about buying a car, we can help you along the way - from saving right through to insuring your new set of wheels.

 

Banking and Credit products issued by Police & Nurses Limited (P&N Bank) ABN 69 087 651 876 AFSL/Australian Credit Licence 240701. Police & Nurses Limited (P&N Bank) acts under its own AFSL and under an agreement with the insurer Insurance Australia Limited ABN 11 000 016 722 trading as CGU Insurance. Any advice provided is general advice only and does not take into account your personal objectives, financial situation or needs (“your personal circumstances”). Before using this advice to decide whether to purchase a product, you should consider your personal circumstances and the relevant Product Disclosure Statement and Target Market Determination.

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