It’s no secret that Kiwi’s love cars, but did you know that NZ ranks third in the world when it comes to motor vehicles per capita? – we even outrank the car-obsessed United States!
Most of us buy a new car every few years, and while Kiwi’s love cars, before you purchase one it might pay to remember:
The tips below might help.
Only in the most unique situations should you borrow to buy a car – perhaps that’s the only way you can get to and from a new job.
This is because interest rates on car loans rapidly hike up the total amount you pay for a car. Car loans usually have at least a 7% interest rate, meaning that the actual amount you pay is a lot higher than the original price. A bonus of paying in cash is that many dealers will accept a lower price for the car as they receive the whole amount instantly.
Racking up a huge car loan to get a flash, new car seems like an even worse idea when you realise how much and how quickly these cars drop in value. Although buying a new car probably means you avoid the risk of buying a lemon, a car will depreciate in value the most in the first few years of its life. In fact, as soon as an average new car is driven off the lot, its value drops by 15 to 20%. For this reason, it is generally believed that the best time to buy a car is when it is 2-3 years old, as it has had its biggest drop in value, but is still new enough to be reliable.
When buying a car, many people don’t realise how much the car will cost in the long run. This can include:
If you have a specific car in mind, research what similar cars are selling for. This will give you a point of reference as to whether you're getting a good deal. From here, you may be able to haggle the price of the vehicle down. If you are going to look at a used car, it is a good idea to take a mechanic with you to ensure that everything is running smoothly and there aren’t any immediate repairs that will need to be completed. There are several companies that will do pre-purchase vehicle inspections to give you peace of mind.
There are a lot of pre-purchase checks to do if you decide to buy privately - protecting yourself with thorough checks is the best way to minimise the risk of getting burnt.
A lot of vehicles here are imported from Japan, and you can get assurances by asking for the importation/export sheet which indicates its condition - many buyers don't know about this.
A reliable guide to New Zealand’s cheapest (and safest) cars to run is available for free. The government’s RightCar site has the backing of extensive research, and has a free database of running costs for many models. You can look up 500+ makes and models and get their safety rating and expected fuel cost per year.
When looking to buy a car, take along someone who knows something about cars. They can help determine if you are getting a fair deal. Your friends and family can also share experiences they had when purchasing a car, which can help ensure that you don’t end up with a lemon – remember to consult those around you.
Finding a car you want that is $3,000 cheaper than similar cars is a sign that you should be very hesitant – there is a reason that the price would be that low. There could be something faulty with the car, or it could be stolen. There could be valid reasons for the price reduction, but just remember, it may mean that you will have to fork out extra funds to get something repaired.
Buying from a dealer may help. You can go down the private sale route, but you're only protected if you buy a car from a dealer.
Overall, there are many things to look out for when you purchase a car, not only immediate costs or ongoing costs, but any repair costs added on top of that. Being aware of these things can save you a lot of money, stress, and hassle. Make sure that next time you buy a car, you think about the small things that can add up to make your purchase easier and cheaper.