A new car could be one of the biggest purchases you make. Find out what's involved in buying a new car and what you should do to get a car that's right for you.

Note: the following information is intended primarily for use in NSW and the ACT  

Choosing the right car 

Consider more than budget when looking for the right car. Think about:

• your price limit
• safety and security requirements
• fuel consumption vs performance - high-performance cars usually consume more fuel
• running costs - high-tech and luxury imported models can be expensive to service, repair and insure. Check the prices of
• common spare parts (eg headlights, oil and air filters) and insurance premiums.
• the number of passengers you normally carry
• if you need power to tow a trailer or boat space for work materials (tools, samples) or sports gear (golf clubs, skis)
• if you need room for sleeping - most passenger-vans and some sedans and wagons can be converted to provide a bed.

Make more detailed comparisons with:

• Operating costs
• ANCAP crash tests
• Car theft scores
• Personal security ratings 

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 or get NRMA Technical Advice on 1300 655 443.

Set an upper limit to your budget and stick to it.

Make sure the car you love is also the car you can afford with our:

• Operating costs

Where to buy

Online	Dealers
Pros :	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	You can haggle for a better price You can take a test drive
Cons :	Cons :
You may not be able to see/test drive cars	You have lots of driving around to do You have to haggle with dealers

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.

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 10km over a variety of roads (eg, 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. 

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 immobilisers airbags anti-lock brakes airconditioning	decorative body trim tinted windows metallic paint special tyres alloy wheels	rust-proofing paint protection

You might be able to buy equal quality equipment much cheaper from independent suppliers but check how it will affect the warranty. The paint and rust protection provided by manufacturers is good quality, so after-market treatment is unnecessary.

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.

New cars under the luxury tax limit must have a minimum (statutory) warranty of 12 months or 20,000km - whichever comes first.

Most new cars come with a longer manufacturer's warranty - two-year/40,000km, three-year/60,000km or even five-year/100,000km warranties. Check our Warranty list for details.

The only exception is for demonstrator vehicles or cars priced over the 'luxury car tax' limit.

Extended warranties

For an extra fee, some dealers offer extended warranty schemes beyond the manufacturer's period.

Consider them carefully before you sign. Read the fine print and calculate whether the benefits justify the cost.

These warranties usually only cover you against certain mechanical failures and limit the amount you can claim. Some also require you to have the car serviced exclusively by that particular dealer.  

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 in NSW.  

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 (eg, 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.  

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 colour 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.

If you get into a dispute with a dealer and can't solve it, contact NRMA Motoring & Services Legal Service on (02) 8741 6280 or the NSW Department of Fair Trading on 13 32 20.  

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, doorlocks, 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 NRMA Vehicle Inspection.