Then there’s also the emotion attached to finding the right car to suit your personality, or finding something that gets you a little bit excited. Plus, a car is a large investment for most, so you don’t just want one that will give you years of trouble-free driving, but one that will retain as much value as possible when it comes to selling.
In my household, we’ve owned 26 cars in the last 26 years and in my business running Blue Toro – a mobile mechanic franchise, we’ve helped thousands of customers, friends and family find cars that are right for them.
The biggest trap we find people falling into is focussing on the makes, models and features they can get for their budget, with next to no thought on resale, reliability and running costs. After all, it’s easier to choose a colour versus kilowatts, ANCAP rating and service costs.
So what should you be looking for? In this article I cover the basics — budget, car type and optional extras. Once you know these factors and have made the important, upfront decisions, you can easily navigate through the hype, reviews and salesmen to find the right solution for you.
1. What’s your budget?
There are plenty of rules of thumb for how much you should spend on a car, with most ranging from 10% to 30% of your annual gross income.
The reality is you need to be clear on what you can afford, either outright in cash or on monthly repayments if you’re financing. And don’t forget the costs don’t end when you drive out of the car lot — servicing, insurance, registration and even fuel all add up.
To work out what’s best for you, ask yourself these questions:
- Do you have a deposit and/or trade-in?
- What’s your monthly budget for expenses? (This includes finance, maintenance, petrol, registration and insurance.)
- Do you have a good credit history? This will affect the likelihood of a loan being approved.
- Will you use the car for business purposes? What percentage of the time? If it’s over 55% then you might be able to claim some expenses and depreciation. (If you’re unsure if you’re eligible, check with your accountant.)
There are plenty of car lease and car loan calculators online that will give you an indication of monthly repayments based on an amount you wish to borrow.
Once you know your budget, you can then look for cars priced around that number.
CAR BUYING TIPS
Most cars’ purchase prices are negotiable, so you can increase your search to slightly above your budget with the view of being able to negotiate down.
Warning!
Your budget shouldn’t just take the purchase price of the car into consideration — it should also consider ongoing running costs. You may find a great car within your purchase budget, yet some will be much higher to run than others. Petrol, maintenance, registration and insurance add up.
As an example, compare a new Mazda CX-5 and Holden Commodore. You could pay around $34,000 to drive either out of the showroom. However, the CX-5 will cost an additional $1,000 per year in running costs.
Many people underestimate how much it will cost to maintain their car. The end result is that they under service their car, which leads to further mechanical problems. (And costs.)
As a general rule, if your car is under 5 years old, take 25% of the budget you just created and put that aside to maintain your car. For older cars put aside 60%.
2. Which car is right for you?
I’m not talking about the colour, here. Right now you need to think about the size, capability and running costs that will suit your needs and budget. Someone with three kids who wants to tow a boat obviously has different needs to a single person who only makes short trips.
Run through this checklist and tick off what you think you require as a minimum. You can then use the completed list to help you narrow your search.
Here is a checklist to help you buy the right car:
What shape do you need?
| Wagon/ hatch | SUV | Commuter | 2-door | Convertible |
| ☐ | ☐ | ☐ | ☐ | ☐ |
| Important if you require extra storage. | Ideal for families of 4-5. | For carrying 6+ people. | Not great if you have child car seats. | More a want vs a need. |
What type of fuel best suits your driving style and budget?
| Electric | Hybrid | Diesel | Unleaded |
| ☐ | ☐ | ☐ | ☐ |
| If your primary concern is to save on emissions. | If you want to cut fuel costs and emissions. | If you drive a lot of km’s and want to save on fuel costs. | The most readily available, so easier to source and negotiate price. |
Is fuel efficiency or performance more important to you?
| < 8 litres/ 100km | 8.1-15 litres/ 100km | >15 litres/ 100km |
| ☐ | ☐ | ☐ |
| Very fuel efficient with the least power. | Moderate fuel efficiency and moderate power. | A gas guzzler with optimum performance. |
No. of passengers (don’t forget the pets!)
| 2 | 3 | 4 | 5 | 6+ |
| ☐ | ☐ | ☐ | ☐ | ☐ |
Do you need to tow a…?
| Box trailer | Recreational vehicle | Car trailer | Caravan | Horse float |
| ☐ | ☐ | ☐ | ☐ | ☐ |
Do you need a specific drive type?
| 4WD (Four wheel drive) |
AWD (All wheel drive) |
FWD (Front wheel drive) |
RWD (Rear wheel drive) |
| ☐ | ☐ | ☐ | ☐ |
| If you do off-road driving. | For lots of highway driving. | For driving in frequent wet weather and icy roads. | For performance, fast acceleration and optimum cornering. |
Which transmission type suits you best?
| Automatic | Manual |
| ☐ | ☐ |
| Good for stop/ start city driving. | Usually cheaper but a better ride in many sports and performance vehicles. |
Age
| New | <3 yrs | >3 yrs | 5 yrs | >5 yrs |
| ☐ | ☐ | ☐ | ☐ | ☐ |
| Lower maintenance costs, new car warranty and greater depreciation (if claiming for business purposes). | Lower maintenance costs, new car warranty, BUT without the high depreciation. | Lower purchase price, higher maintenance costs. | The most costly 100,000km service due around the 5-year mark. Typically the tipping point for when parts start to fail. | The older the car, the greater the problems and expense. Be prepared to maintain and service well. |
Country of origin
| Japanese | Australian | American | European |
| ☐ | ☐ | ☐ | ☐ |
| Reliable, cost efficient, good resale value.. | Reliable, larger family car with more grunt, more expensive to purchase and maintain. | Larger family cars with more grunt, great to drive, more expensive to purchase and maintain and less reliable. | Stylish and nice to drive, the least reliable and the most expensive to maintain. |
3. What extra features do you want?
There’s a raft of electronics and accessories available in cars. For the most part, these days even entry-level new cars are full of a standard set of electronic gadgets. This is often the fun part of choosing a car, and usually the time when your budget will run away with itself.
When you’re buying a new car, accessories can go one of two ways:
- They can be a great way for the salesperson to rack up your purchase price. When faced with a myriad of fun options, it can be easy to say ‘yes’ to a few extras that, on their own, don’t seem like a lot. If you’re spending $30,000 on a new car, what’s another $150 for custom mats, or $500 to get an even more amazing paint job?
- They can be a great way for you to get extra value in the sale. If you’re super savvy you can negotiate some of these items after you have agreed a purchase price for the base model of the car. Then you can get a few additional things thrown in for free or at a reduced rate.
When considering extras, it’s important to know what matters to you in terms of your lifestyle and what will increase resale value. When buying a new car you’ll be presented with a raft of options. Before you become blindsided with a list of expensive options you don’t need, decide on your ‘must haves’ prior to negotiations. The same goes when selecting a used car.
If you are considering buying a used car, it’s important to check the included safety features. Most new cars come standard with safety features such as airbags and ABS, however older models may not. When buying a used car, consider whether safety features are important to you and select a make and model that suits.
Here are just some of the extras you may be presented with. The ‘must haves’ and ‘nice to haves’ will increase your resale value marginally and make for a better ride. Everything else is just a waste of money. You may decide you want them anyway, but it should be your decision — not something you’re pushed into by a car salesman.
| MUST HAVE ☐ Bluetooth ☐ Floor mats ☐ Air conditioning ☐ Parking sensors |
NICE TO HAVE ☐ GPS ☐ Sunroof ☐ Tinted windows ☐ iPod/Aux in ☐ Leather seats ☐ Automatic transmission |
A WASTE OF MONEY ☐ Rust proofing ☐ Paint protection ☐ Larger wheels ☐ Metallic paint ☐ Premium sound systems ☐ Sports packages ☐ Sports suspension ☐ Night vision ☐ Custom leather/ stitching ☐ Heated seats ☐ Extended warranty |
The finish line
Once armed with your budget, checklist and extras use a car buying site such as carsguide.com.au or carsales.com.au. Enter your requirements to narrow down your search. You’ll be presented with the vehicle options that best suit your needs.
Then jump onto caradvice.com.au for comprehensive reviews to compare the cars in your search results and narrow down the best car for you. Use Car Advice’s rating system to help you compare.
The Carousel would like to thank Janelle Gonzalez for this article. You can check out her mobile mechanic business Blue Toro here. Also, you can read excerpts from Janelle’s Book The Car Survival guide too.
PDF Version:how-to-choose-a-car_checklist
