Buying your first car
Here are five important budgeting and finance points to consider first before buying your first car.
1. Start with the numbersCars run on a lot more than petrol. After the once-off costs – your deposit, car registration and roadworthy certificate – there’s always the monthly repayments and insurance.
Use a car calculator to assess the price you can afford, and know what the instalments will be on that amount.
2. Stick to your budget
‘Seriously interested’ feels very different to ‘just looking’ when it comes to cars, and it’s easy to get carried away with the fresh smell of leather and shiny gadgets during a test drive.
But buying your first car should always be a practical decision, so that you can comfortably afford to live with it.
3. Do your homework
Cast your net wider than one brand of car, and take time to investigate things like fuel consumption and the cost of the cars’ parts. If you’re buying a pre-owned car, ask for details on its history, like it’s maintenance plan and if the car has been in any accidents.
4. Choose your financing wisely
Weigh up your finance options: is an instalment sale or a financial lease your best solution?
Instalment sales allow you to buy a car and pay for it over a few years (you officially own the car once you’ve made the final payment). With a financial lease, you still use the car while paying the instalments over a fixed period, but once you’ve paid for it you can either choose to take ownership, or take out a new lease on a different car.
Car loans can be repaid over 12 months to five years or more. A longer repayment period – and paying a residual or balloon payment – can bring down your monthly repayments, but think about how much extra you’ll be paying over the long run.
5. Apply, and get insured
You can easily apply online over the phone or in-branch once you’ve found that dream car, but once your financing is approved you need to act quickly to get insurance in place. Get as many quotes as you can in advance, and know what you’re paying for.