Just arrived to Australia – buying your first car?

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If you have just arrived in to Australia, firstly congratulations. Welcome to the best and safest place on earth. As i am writing this we are experiencing Covid times and i am very grateful to be locked down in Perth, where times have been pre-covid normal for some time.

I digress.

Having arrrived from the UK in 1995 i understand the challenges and lengthy “to do” list when you relocate you and your family to a new Country. High up on this list it to purchase a new family car, motorbike or business asset. And time is of the essence. So where do you start?

There are lots of questions you need to ask yourself?

  1. Do you buy new or used?

  2. Do you buy from a dealer or privately?

  3. What is my budget?

  4. Do i use my savings or finance my purchase?

  5. Do i use a licensed finance broker or dealer finance?

  6. what will my insurance cost?

These are just a few questions you should consider researching the answers for before you buy. Here are some suggestions to help you answer some of these questions.

  • Do you buy a new or used vehicle?

    All used car purchases from a dealer come with a 3 months statutory warranty in addition to any remaining manafacturers warranty. Under Australian Consumer Law this could be extended if the vehicle is considered unroadworthy at the time of the purchase.

    New cars tend to lose value as soon as you drive them out of the dealership. The depreciation varies depending on the Model – some hold their value more than others. A demo vehicle is generally cheaper than a new car because it has been licensed and used by the dealership for demonstration purposes. Demo’s are a great way to get a new car for a discounted price.

    Used cars from a dealership are a great idea even if you do not want to buy a new car. Most franchised dealerships pre-inspect their vehicles before they are put up for sale, and given they need to provide a statutory warranty you could feel comfort in purchasing a reliable vehicle from them. Having said that, cars are mechanical and can be break down at any time; so you should consider a mechanical breakdown or extended warranty.

    If you purchase a used vehice ensure you perform a PPSR check on it before you make the purchase. This checks for encumbrances on the vehicle and whether it is a “repairable write off”. Dealers or private sellers are not required to disclose a “repairable write off” to you, unless you ask the question. PPSR is a check you can do online.

  • Do you buy from a dealer or privately?

    Buying through a dealership will provide you with some comfort when it comes to vehicle warranty, but it is a minefield out there. A small minority of the used car dealerships out there, can be less than reputable. So you need to make sure you ask the right questions and do not be pressured in to buying. Make sure they are licensed and members of the MTAA, the vehicle is not a repairable write off and the warranty options that come with the car. Our finance team have a strong relationship with a network of used car dealers and this may be a good starting point for recommendations.

    Buying privately can be a great way to source your vehicle. you may find this a cheaper option than buying through a dealer. But you do need to be extra diligent. It is worth considering a pre-purchase vehicle inspection to ensure the vehicle is sound structurally and mechanically.

    Our finance team are able to help you finance through a dealership or privately, and will guide you through the process to ensure you have asked the right questions and performed the necessary checks.

  • What is your budget?

    Before you look to purchase a vehicle, you need to consider your budget; especially if you are looking to finance the purchase. What are you comfortable repaying weekly, fortnightly or monthly. And stick to this budget. It can often be tempting to see more expensive cars at a dealership and increase your budget on emotion. Justifications such as “Its only an extra $ 10 per week” can be common, but you have to remember that over 7 years this equates to around $ 3,500. Don’t do this, be disciplined and stick to your original budget.

    Our finance team can help with budgetting by providing guidance on repayments based on the vehicle you are looking to purchase. A pre-approval is always a good idea before you buy. It takes the uncertainty out of the process.

    Consider 5 year loan terms too, as opposed to the default 7 years. Albeit the repayment will be higher, this can save you interest over the loan term.

  • Do i use my savings or finance my purchase?

    Arriving in to a new Country for a permanent move can be an expensive process. And you need to consider the ongoing costs of your lifestyle. Paying cash for an asset can save you interest on the loan, but it can also consume your savings. Consult with a qualified advisor to help you with this decision.

  • Do i use a licensed finance broker or the dealers’ finance?

    i have covered this off in this blog, but to recap on some pertinent points:

    • Finance Brokers are licensed finance operators, unlike many business managers in car dealerships.

    • a licensed finance broker must abide by the compliance requirements of an Australian Credit License, and these licenses are regulated by ASIC,

    • if you are considering using a dealers finance, always ask the Business Manager for a finance quote upfront. The quote should include all fees associated to setting up of the loan, as well as interest rates and monthly fees.

    • Finance Brokers are obliged to have your best interests as their priority. This is law. And was introduced in January 2021 under the Best Interest Duty. It could be deemed a Business Manager’s best interests are aligned to selling the car (not you) given they are employed by the dealership.

    • Finance Brokers are required to be members of AFCA, an external dispute resolution ombudsman. Should there be a dispute in the future, and it can not be resolved directly with the Broker; then AFCA act as a Mediator.

    • Finance Brokers will have a wider choice of lenders and products for you to choose from. This allows them to provide a product that is more suitable for your needs and requirements.

    • So should you decide to use the Dealers Finance, ask the right questions and be aware of the contract you are signing.

  • what will my insurance cost?

    If you are financing your new car or asset, you are legally required to insure it with Fully Comprehensive cover. Not Third Party or Third Party, Fire or Theft. Ensure you get several quotes for the insurance focussing on premiums and excesses, as well as driver limitations. You may want to hit the Google Search for this, but our finance team are able to provide quotes for insurance (on a general advice basis only).

These are just a few tips to help you navigate the purchase of your new car or other asset. To ensure the purchase process is a pleasant one. The last thing you want is a poor experience when you are purchasing your first car in Oz. So do your checks, ask our finance team lots of questions (that’s what we are here for) and budget upfront.

Oh, one last thing – Transfer Stamp Duty needs to be paid on any vehicle you purchase. On a new car it forms part of the total purchase price, but with a used car it is charged after you take ownership; and generally has to be paid within 28 days. You can calculate the stamp duty here (WA). Don’t forget to include this in your budget.

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