Know
the real cost
There's more to the cost of a car than the retail price.
Extra costs include stamp duty, registration, insurance, extended
warranties (optional) and dealer delivery charges. Once you've got
the car, there are running and maintenance costs to consider.
These vary from model to model, so factor them into your budget
early on.
Obtain a quote for insurance.
Set an upper limit to your budget and stick to it.
Make sure the car you love is also the car you can afford.
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Where to
buy
Online
Pros: You don't have to drive to dealerships
There's plenty of research material available
You don't have to negotiate face-to-face
Cons: You may not be able to see/test drive cars
Dealers
Pros: You can haggle for a better price
You can take a test drive
Cons: You have lots of driving around to do
You have to haggle with dealers |
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Ways
to pay
The general rule about borrowing money is: the longer you
take, the more you pay. Only borrow as much as you need, and
don't over-commit.
>
pay as much as you can up front - in cash or as a trade-in -
and pay less interest.
>
shop around for the best finance deal - you don't have to use
the finance company suggested by the dealer. Dealer finance
can cost you a lot more, especially if the first year's
insurance is included in the total amount.
> consider leasing or hire-purchase, particularly if you're in
business. You may be eligible to claim some of the payments as
tax deductions. Talk to your accountant or business adviser
before entering into a lease or hire purchase agreement.
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Test drive
A thorough test-drive is crucial.
Even if the car you want is just an updated version of the one
you have, there may be some important changes you don't know
about.
>
before driving ask the dealer about your legal liability
should you crash.
>
take at least 20 minutes, and drive at least 10 miles over a
variety of roads (i.e. suburban streets, arterial roads and, if
possible, a highway).
>
try parallel parking and a U-turn to test the steering and
all-round vision.
>
take a close look at all the features and equipment.
>
no matter how nice it feels to drive, keep a level head for
the negotiating process. |
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Optional Extras
One way to blow your budget with a new
car is to buy all the optional extras the dealer offers.
|
Worth serious
consideration |
Nice but not necessary |
Forget it |
burglar alarms
engine immobilizers
airbags
anti-lock brakes
air-conditioning |
decorative body trim
tinted windows
metallic paint
special tires
alloy wheels |
rust-proofing
paint protection |
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Understanding warranties
One big advantage of buying a new car is the warranty. A warranty is
your guarantee that you won't have to pay for any faults that appear
within a set period of time.
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Beware of advertising traps
False advertising is illegal but you need to be wary of vague or
exaggerated claims.
Do your research before you enter a car yard - know the type of car
you want and how much you can afford.
Advertised prices for new cars must include all dealer charges,
unless specifically listed. Advertisements must state if statutory
charges are extra, and the general term 'plus on-road costs' is
prohibited.
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Agree on a trade-in value
Trading in your car for another is easier in some ways than selling
privately but it does have its drawbacks.
The main one is that you probably won't get as much money for it.
After all, the dealer has to re-sell your car for a profit - and
that's after fixing any faults.
Trade-ins can also be confusing. For example, the amount offered for
your old car could include a discount on the car you're buying.
>
ask for the total changeover price - how much you'll pay to leave
your old car and drive away in a new one. When all is said and done,
that's the only figure that matters.
>
ignore dealers' negative comments, such as: "nobody wants to buy
that model anymore" or "your car isn't in very good condition".
These are often just sales techniques to get you to accept a lower
offer
>
the trade-in value of your car may only be valid for a certain time
(i.e. 28 days). Check if the trade-in will be revalued if the dealer
can't deliver your new car in that time.
You could - if you have time - get a trade-in price from the dealer,
then try to sell it privately for more. You might have to wait a few
extra weeks to get your new car but selling privately may well save
you some money.
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Negotiating a deal
You know what car you want and you're ready to negotiate.
Don't take this step too lightly - you can usually negotiate a lower
price than the dealer is asking. It often depends on how keen you
are to buy and how keen the vendor is to sell.
>
keep the seller uncertain whether you're interested in buying their
car or another one. Until the deal is done, the price can always go
a little lower.
>
shop around. Ask other dealers if they can do better for similar
cars.
>
ask for the 'on the road' price, or 'changeover price' if you're
trading in your present car. This will include all options you've
selected, and the statutory and dealer charges. It removes the risk
of getting caught by a 'hidden cost' that you hadn't considered.
>
make the seller nominate the first figure, then mention any lower
offers by other sellers to force the price down.
> dealers usually offer more attractive prices for cars in stock. If
you fall in love with a particular model or color with specific
options, you may have to wait while the dealer orders it risking a
price rise in the interim. |
Signing the contract
Don't get carried away in all the excitement once you've agreed on a
deal. The dealer will ask you to sign a legally binding order form.
If you sign then change your mind, you may lose your deposit. So:
>
read and understand it fully before you sign
>
insist all costs, including stamp duty, registration fees and any
insurance and optional extras are clearly itemised
>
never sign a blank order form or one with any blank spaces
>
never sign orders with more than one dealer
>
don't sign if a delivery date or deadline is not specified (ASAP is
rarely as soon as possible)
>
the order usually states the price is 'on delivery'. If your car has
to be ordered from the factory, any price increase before delivery
will be passed on to you.
If you have to borrow money, and don't want the dealer to arrange
finance for you, make sure the following clause is in the sales
contract:
'This agreement is subject to the purchaser obtaining finance on
terms satisfactory to the purchaser to complete the sale. If the
purchaser is unable to arrange finance which is satisfactory to
complete the sale, the purchaser may rescind the contract, and the
deposit paid shall be refunded in full to the purchaser.'
If you sign a contract without this clause, you may have to accept
the dealer's finance at a much higher interest rate.
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Taking delivery
Before you sign for delivery, inspect your new car thoroughly.
>
make sure the vehicle's 'built date' shows the year and month of manufacture you
expected and is stated in the paperwork
>
check for paint, trim or glass defects
>
check all lights, door locks, window winders, seat adjustment mechanisms and
accessories are working properly
>
check the spare wheel, jack and tool kit are in place
>
take the car on a test drive with the sales representative to check if there are
any mechanical faults. Make a note of any faults to be fixed at no charge during
the first service. Ask the sales representative to acknowledge them by signing
the note
>
try to take delivery and make all checks during daylight hours and in fine
weather.
It's also wise to have a Vehicle Inspection.
Driving Records
Driving Records are
state driver's license reports containing details about a
driver's history including accidents and violations. Each state
maintains records of their registered drivers' activities
occurring only in that state.
Driving records can be
obtained by insurance companies to determine your rates as well
as by companies during their employment screening procedures
when hiring. Some employers may even require that you submit
your driving
record along with your employment application. A single
typo on your
driving record can cost you hundreds of dollars in insurance
rates. It can even cost you a job.
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