Five critical questions for car buyers

Five critical questions for car buyers
About this post

The decision to buy a new car may seem insignificant compared to purchasing a house, but the due diligence required is very similar.

A wrong move in the bargaining process could equal years of additional debt, while a hasty selection could diminish the resale value.

Essentially, it comes down to the questions you ask at the onset, which include the following.

Does it meet my needs and expectations?

Before you get started, it’s wise to come up with a checklist of what exactly you’re looking for in a car. New or second hand? Prestige or budget? Compact or family? What model?

Then, narrow down further and ask whether it has the right safety and reliability ratings, ticks the boxes on fuel efficiency and has a clean maintenance history if it is second hand.

Do I know anyone with this car?

An honest reviewer will tell you what the car dealer or private seller won’t. Scan your network to see if anyone has the car you intend to buy and ask them for the pros and cons. You can also look on sites like reddit for reviews of makes and models.

What are the running costs?

Underestimating the cost of running your new car is a dangerous mistake from a budgeting perspective. Find out how much it costs to service (get quotes from several auto-mechanics), how much a tank of fuel is and how long it typically takes before parts start to deteriorate. Then find out how much part replacement costs are.

Can I do better on price?

Always be willing to negotiate on price because the sticker price is rarely what the vendor expects to sell it for. If you have doubts, walk away, even if that takes the offer off the table. Often, if you go back in 24 hours, the offer will still stand.

How will I finance it?

Car loans are becoming a more popular way of paying for a new vehicle for those who don’t have ready finance, but before you take one, it’s important to evaluate how much you can afford to borrow, what your repayments would be and how long the liability would hang around.

Unlike houses and units, cars inevitably depreciate in value, so only take a loan if you’re comfortable you will be able to pay it off over a period of time, in a variety of circumstances, and know that you are unlikely to recoup the sale value. 

This is an information service. By browsing on the website and/or using our search tools, you are asking RateCity to provide you with information about products from multiple financial institutions. We will try to show you a range of products in response to your request for information. The search results do not include all providers and may not compare all features relevant to you, for further details refer to our FSCG. The rating shown is only one factor to take into account when considering these products. We are not a credit provider, and in giving you product information we are not making any suggestion or recommendation to you about a particular credit product. If you decide to apply for a product, you will deal directly with a financial institution, and not with RateCity. Rates and product information should be confirmed with the relevant financial institution, and you should review the PDS before you decide to purchase. See our terms of use for further details. This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.