According to Roy Morgan Research, the number of Australians who intend to buy a new car within the next four years has been steadily climbing over the past six months, with a total of 100,000 more car-buyers now in the market than there were at the end of 2015.
With so many buyers in the market, many consumers are likely to experience buyers remorse generated by finance, pricing and inclusions not meeting their needs. That’s why we’ve developed this simple list of Do’s and Don’ts you can follow when buying a new or used car.
DO prepare for finance in advance
If you haven’t taken the time to consider your finance options, you are ripe to be pushed to financing through the dealership, which often profits the dealer more than it helps you.
The most common factor consumers look at when financing is the interest rate, but did you know that lower rates may equal higher fees associated with a loan? Instead of choosing your loan based on interest rate, the three most important factors to consider are:
- Monthly Repayments – regardless of the rate, the amount you pay each month including any applicable fees should be considered as the most significant factor.
- Term – the term is an important factor to consider to ensure you don’t owe more on the vehicle than you can sell it for. If you’re looking to upgrade in 3 years, a 5 year term is unsuitable.
- Residual – a residual or balloon payment at the end of the loan term will lower your repayments, but
DO educate yourself
According to Autotrader, the average consumer spends almost 9 hours completing research online into a vehicle before purchasing. This time may seem excessive, but educating yourself on features, pricing and inclusions is a must to prepare yourself for negotiating.
There are some amazing online tools for Australian buyers to research vehicles, such as:
- How Safe is Your Car – developed to provide car buyers with independent information about the safety of new and used cars in the market.
- Red Book – part of the CarSales Network, Red Book features reviews, price comparisons and actual listings for new and used cars.
- Car Point – for new cars, CarPoint offers detailed specification sheets, lists standard and optional accessories and can even provide price forecasts.
DO test drive the vehicle.
Surprisingly, a large number of new car buyers don’t test drive the same vehicle as they are looking to purchase.Similarly, used car buyers may avoid completing a test drive in favour of getting a mechanical inspection to confirm condition to avoid the pressure tactics employed by dealer salespeople.
Our top tips for a successful test drive are:
- Choose a route yourself, rather than allowing the seller or dealer to direct you.
- Take your time and drive in a variety of road and traffic conditions.
- Make sure the vehicle has the same specifications as the car you’re looking at buying.
- Take a friend or family member so they can drive part of the route while you take the passenger seat, you’ll be surprised what you can learn as a passenger.
- Don’t commit to buying a car on the same day as the test drive.
DON’T spend too much time shopping around
We all love to snag ourselves the best bargain, and it seems lax to not shop around for the best price… But have you heard the saying time is money?
According to ACA Research, the average consumer spends 4-7 weeks shopping around for a vehicle before finalising their purchase. When you consider the average time spent researching cars online is almost 9 hours and the average time spent in a dealership is 3 hours per dealer, your time can quickly add up and outweigh the benefits of a nominal saving.
If your budget is at the lower end of the market for the vehicle you want, it may be advantageous to connect with a vehicle sourcing service. Look for a consultant that charges the dealer and has strong buying power, they can save you time and money.
DON’T blow the budget
Buying a car can be an emotional process, especially when that dream machine is sitting in the dealership exactly as you pictured it. If the vehicle and options presented (such as window tint, paint protection etc.) are what you need but exceed your budget, take a day or two to think it over before committing.
According to a recent survey by Roy Morgan, the average Australian anticipates they will spend $36,840 on their next car. With the average household income being $133,000 per annum that’s a whopping 28% of annual earnings on a car.
The key to controlling possible buyers remorse related to over-spending is to set your budget and stick to it. Your budget should be based on research into comparable vehicles on the market, taking into account your financial position and any finance repayments you need to make.
DON’T be afraid to take time out to assess
Salespeople are trained to ask for your business and push for a sale on the day. After all, their income is based on volume of sales, not customer satisfaction..
Don’t be afraid to let the dealer or seller know you need time to assess the deal before you sign any paperwork. Contracts can be finalised by email, which takes you out of the dealership and gives you the opportunity to carefully consider your options.
Take at least a day to review the proposition and make sure you write down any questions you need to ask before committing, along with any conditions you may want to include in the contract, i.e. subject to finance. Always get any additional features or promises from the dealer in writing.
It’s also a good idea to pay your deposit with a credit card so you can use the chargeback system if the dealer happens to go out of business before you pick up your car.
Now you’ve got the basics, it’s time to get out there and get your dream machine.
iFinance Global would be pleased to assist you in securing finance, providing a complimentary vehicle sourcing service and arranging insurance to save you time and money! Contact us today.