Buying a new car can be a great experience. It means a new set of wheels, the thrill of negotiating and taking a few test drives along the way. But it also means being at the receiving end of advice from anyone that finds out that you are buying a new car. Whether it’s about the vehicle you should get or how to watch out for dealership scams, people are always keen to share their knowledge.
The trouble is, not all of these tips are useful. Here are a few pieces of advice that you may want to think twice about and take with a grain of salt.
"Get your finance at the dealership"
Dealership finance can seem like a bargain. Many dealership finance offers come with 0% interest for up to five years, which can help keep your repayments low. But you might want to reconsider signing up to a financing deal without first finding out whether it’s actually the best option for you. If the car salesperson offers you a good deal on dealership finance, it might not actually be the lowest rate available.
There are also a few things that you need to consider about dealership finance, such as the balloon payment, which needs to be paid at the end of your loan term. It can often be in upwards of $5,000 and many dealership financiers make their money through people needing to refinance this amount. Think about whether you’ll be ready to pay this straight after repaying your loan.
"You can get a good car deal at any time"
While it’s true you can come across a good car deal at any time of the year, there are certain periods when you’re more likely to find a great deal. A well-known time is at the end of financial year when you can save on total vehicle costs and take advantage of extras.
More frequently, the end of the month or the end of the quarter when salespeople are looking to meet their targets are great times to grab a deal, as well as Mondays and Tuesdays when sales have slowed down after the weekend. The start and the end of the year are also good times to negotiate a deal because of surplus stock left over from the previous year (at the start of the year) or plates that are nearing the end of their “newness” (at the end of the year).
"Think about whether your loan repayments will work with your current budget"
When considering your loan options and the type of car that you can afford, don’t think in terms of your current budget. Think in terms of your future budget when you actually own the vehicle. Take into account not only the loan repayments but also the cost of petrol, running costs, insurance and anything else you will need for your new vehicle. Use our handy Budget Calculator to see how your new purchase might fit.
A car is a big purchase decision, but there are a lot of smaller decisions that factor into it too – new or used, private or dealership finance, extras. And while advice is always welcome for these kinds of complicated decisions, it’s important that you do your own research to avoid running into problems down the road.
Elizabeth Barry is an editor at finder.com.au. She enjoys reading car loan PDSes so that you don’t have to.