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New car buyers beware

New car buyers beware

Car manufacturers are luring motorists with a combination of low-interest finance deals and other offers in an effort to stimulate a flat market, experts warn.

The latest data from the Australian Bureau of Statistics reveals new car sales fell in the month of July by 0.8 percent. 

But drivers are being urged to consider the real costs of buying a new car.

Financial commentator, Scott Pape, said some manufacturers are offering finance on new cars from as little as 1 percent interest.

“Any saving you get from getting a cheap financial deal is going to be offset by the fact that you’re losing a heap of dough,” he told morning TV program Breakfast.

That’s because cars depreciate on average by around 14 percent per year in the first three years, then up to 8 percent after that, according to consumer watchdog Choice.

Pape recommends buying a three- to four-year-old model to avoid losing out: “That way somebody else has paid that depreciation tax”.

But if the appeal of a shiny new car is hard to resist, then consider these strategies to ensure the greatest value for your wheels over the long haul.

Market research

Do your research to discover which makes and models hold their value best over the years and use this information to guide your buying decision. The same can be said for colour and transmission; fuchsia may be your favourite colour now, but other drivers may be less inclined to buy a pink-coloured used car when it comes time for you to sell.

Timing is key

Buying at the end of the calendar year or just before a new model is due to be launched can increase your bargaining power on a new car. That’s because the dealer will be keen to clear older stock from the lot, so you’re likely to get a better deal on your purchase.

Ship shape

Hang on to receipts from regular car services as a record for potential buyers. They’ll be pleased to have found a well maintained car and you’ll be in a better position to demand your asking price. Repair any minor damage to the car too, such as small dents or scratches, because this will further increase your resale value.

Shop around

It might be tempting to opt for the first car loan you come across so as to get the ball rolling and secure your dream car. But it really pays to shop around for car finance, in the same way you would when shopping for the car itself. Compare car loans online to shave time otherwise spent visiting multiple websites of car loan providers in search of quotes.

And finally, Pape urges drivers to cap their spending: “Buy the cheapest car that your ego can afford. And remember, that while it can be nice to have that new-car smell, it does come at a cost”.

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