Buying your first car
Buying your first car is a major decision.
Typically, purchase price is the most important detail for young people and then the type of car follows second. However, even if you budget is small, it doesn't mean you can't buy a safe value-for-money car.
Before you do anything, make sure you do your research and shop around before you commit to buying anything. It is important to compare prices, warranties, guarantees and the condition of cars you are interested in.
One of the biggest considerations when looking at a potential car is its
safety features. If you can afford a safer car over a bigger car, it is a far better option to go safety first. One way of checking a car's safety rating is to visit the site "How safe is your car".
You can look at ads in the paper or online to see the price range of the type of car you're after. That way, you should have some idea of the real value of a car when you see it, and can avoid paying more than it's worth.
Arrange your own finance before you finalise your choice of car - this will help you get a good deal on the car and the loan. If you pay as much as you can up front, you'll pay less interest. A good way to save a healthy deposit is to set up a regular deposit from your main bank account into a fee-free savings account which is there solely for the purpose of saving for your car - and then you can't be tempted to dip into it!
If you still need to borrow some money to finance the car, don't commit to more than you can afford. Many people say if it will take more than 36 months to pay off then, perhaps, you should consider another vehicle.
"Shop around for a loan, and don't take the first offer," says Jack Haley, Vehicle Policy Specialist, NRMA. "Most car dealers will offer finance but you should always compare costs, and work out what the total cost of the loan is over the repayment period - the longer the loan term, the higher the amount."
Ask for a copy of the contract and, if the dealer is arranging finance, the loan agreement. Take them home and read them thoroughly. Don't feel pressured to sign on the spot, and never sign papers with blank spaces or that are incomplete. Dealer finance often carries high interest rates, so check the interest rate on the loan agreement and compare it with current bank rates.
If you have to borrow money and don't want the dealer to arrange finance for you, you'll need to make sure there is a clause to that effect in the sales contract. Otherwise, you may have to accept the dealer's finance.