Are you currently in the market to buy a new car? The End of Financial Year (EOFY) often brings an influx of car advertisements, enticing buyers with deals and discounts. So we had financial expert, Elson Goh, unravel the complexities of buying a car and share some valuable tips and tricks to help you make an informed decision.

Car Sales Statistics

In 2023, a record 3.3 million cars were sold, marking one of the highest sales years in a long time. “Perhaps the pent up demand or the lack of the ability to buy cars during COVID. Or maybe Baby Boomers are buying their dream cars,” Elson explained. The top five car brands in Australia are dominated by Japanese manufacturers, with Toyota leading the market at 40%, followed by Mazda, Mitsubishi, and Kia.

Australians also have a notably long-term relationship with their vehicles, keeping them for an average of 11 years and three months. This long-term ownership highlights the importance of making a well-informed car purchase that will serve you well for many years.

Electric Vehicles

While electric vehicles (EVs) offer potential environmental benefits, the financial considerations are complex. The upfront costs of purchasing and installing charging infrastructure are significant, and annual insurance and repair costs are generally higher. Surveys indicate that car insurance for EVs can be nearly $700 more expensive than insurance for petrol cars!

Additionally, EVs tend to depreciate faster due to advancing technology and increased adoption rates. Another major concern is the lifespan of EV batteries, which need replacement every 8 to 15 years. Although battery prices are expected to drop, replacement costs remain substantial, and the environmental impact of disposing of old batteries is still a significant issue.

New or Used?

Elson says it depends on whether you can accept the condition of a used car, trust the previous owner to have taken good care of it and can find the specs and colour that you are looking for. If you decided to purchase a used car off social media consider these points to avoid getting scammed.

  • Vehicle History: Check if the car is stolen, written off, or under finance using the Personal Property Securities Register for a small fee.
  • Pre-purchase Inspection: Hire a mobile inspector if the seller doesn’t allow you to take the car to a mechanic.
  • Documentation: Obtain a copy of the seller’s driver’s license and sign an agreement, especially as cash and bank cheques become less common.

Choosing a Payment Option

Consider the following payment options:

  • Cash: Using savings or offset accounts is the cheapest option but requires sufficient savings.
  • Salary Packaging/Novated Lease: If available through your workplace and you’re in a high-income tax bracket, this could be a viable option.
  • Redraw or Home Loan Extension: Use extra payments from your home mortgage, but remember this spreads repayments over a potentially long period.
  • Car Finance or Loans: Be cautious of fees and additional costs.
  • Personal or Unsecured Loan: Generally not advisable; consider public transport instead.

Final Tips

  • Set a Budget: Determine your maximum price and stick to it.
  • Factor in Extra Costs: Include a buffer for stamp duty, license transfer, vehicle registration, and possibly new tires—around $1,000.
  • Cash Flow Considerations: If financing with debt, ensure it doesn’t strain your finances. Avoid putting yourself under financial stress for a vehicle.

By considering these factors and planning carefully, you can navigate the complexities of purchasing a car and make a decision that best suits your financial situation and personal preferences. Additionally, consider supporting our station sponsors Titan Ford and Melville Mitsubishi.

Listen to Elson Goh’s full conversation with Jo below.