Buying a car can be pretty tough, especially when you think about all the different factors you need to consider to find the right one.
While you can still consider the smaller things, like how roomy it is in the back, the warranty on the car, the in-built technology like Bluetooth, and the colour, there are ultimately five big ones you should consider when buying a car that’ll make a much bigger difference in terms of value for money.
The car’s fuel economy and fuel type
How much it costs to run and own
How safe the car is
Whether it’s new or used
And how you choose to pay for it
1. How fuel-efficient is the car?
Fuel is arguably one of the biggest costs you have to factor in when buying a car. A car might be on sale for a low price, but you could offset those cash savings by paying far more than you should for petrol or diesel. The 2019 Transport Affordability Index found the average two-car Australian household (two adults, two children) pays $68.99 for fuel every week, which is over $3,500 per year!
The cost for you will depend upon the size of the engine and how much you use the vehicle, but by getting a fuel-efficient car you could be saving yourself hundreds of dollars each year.
Is it a green car?
If you’re in the market for a new car, why not go green, with an electric or hybrid car. While electric car ownership is pretty tricky in Australia at the moment due to a lack of model choice and charging infrastructure, electric cars can still be much cheaper to own. According to the New South Wales Government, they can provide savings of up to 70% on fuel, saving the typical car $1,000 per year. They’re also about 40% cheaper to maintain, although they’re sometimes more costly upfront.
If you’re thinking about getting an electric, hybrid, or more fuel-efficient petrol car, then you could qualify for a loans.com.au green car loan, which provides a 0.7% discount on your car loan interest rate for buying an environmentally-friendly model. This can save you hundreds if not several thousand off the overall cost of buying that car.
See our guide on going green when buying your next car.
2. What will it cost to own?
Fuel isn’t the only ongoing car cost, although it is one of the biggest. Other running costs you need to consider include:
Car insurance: average weekly cost of comprehensive car insurance is $24.63 per week ($1,280.76 per year)
Maintenance and repairs: average household paid $29.55 each week, ($1,536 each year) for maintenance and servicing.
Registration: the average annual cost of registration, CTP and licensing for a two-car Australian family is $1,588 in capital cities and $1,472 in regional areas.
Depreciation: can cost hundreds per year and could make your car worth thousands less by the time you sell it.
Some of these costs are unavoidable - all cars on public roads in Australia must be registered and must be insured with at least compulsory third party car insurance (CTP). Others will need to be paid intermittently, like servicing, but the costs of maintenance and repairs can be reduced by taking good care of it. Comprehensive car insurance also isn’t always a requirement but is recommended. Your driving history, travel habits and the type of car itself can reduce the cost of your insurance premiums.
Here are some of the cheapest cars to run in Australia as of 2021.
3. How safe is the car?
While most new cars these days are safe, you should still consider the car’s ANCAP safety rating before buying. NCAP (Australian New Car Assessment Program) rates Australian cars based on how safe they are, assessing things like the structural integrity of the car and the safety features it comes with. The higher the safety rating the less likely you are to be injured or killed in a crash, and used, older cars are more likely to have lower safety ratings.
Safer cars also aren’t really more or less expensive than ‘unsafe’ cars these days as most cars get around 4-5 stars. But as the saying goes, you can’t put a price on your family’s (or your own) safety.
4. Should you buy new, or used?
You have the choice between buying a shiny brand new car or buying a second hand one, either from a dealer or from a private seller. Both new and used cars have advantages and disadvantages when buying:
Buying a used car is usually much cheaper than buying a new car, and can have smaller depreciation costs - new cars can depreciate by as much as 20% as soon as you drive away
Buying a used car can also come with more risks: they’re more likely to break down or need repairs, can be more expensive to insure, and you might have to settle for a higher interest rate
Used cars can also be a bit trickier to buy, especially from a private seller online
New cars can be easier to buy, as you can buy them right from a dealership
New cars can have discounts depending on when you buy them, but dealers can be a pain to deal with and can try to slug you with expensive extras
You also need to decide if you want to trade in your old car to buy a new one, or if you’d prefer to keep it as a second car or sell it privately.
5. How will you finance the car?
Just as important as all of these (if not more important) is how you plan on paying for it. Cars are one of the most expensive purchases the average person makes, so you’ll need a good low rate car loan to ensure your monthly repayments are manageable. Even if you get a good price on the car you want, a car loan with a high-interest rate and high fees can cancel out those savings.
That’s why you should consider one of loans.com.au’s low rate car loans. Our car loan rates are among the lowest on the market, so use our car loan repayment calculator to estimate what your repayments could be, and speak to one of our friendly lending specialists today to find out more.