Buying a new car

I just bought a car over the weekend, with the delivery finalised today. I have now bought a total of 4 cars from dealers over a period of 6 years since moving to Australia. Each time I learn something new and this recent purchase had the highest learning curve.

A few tips if you are looking to buy a car (these are not new but based on my personal experience which can also be found elsewhere on the net):

a) When buying from a dealer, avoid purchasing other products or services apart from the car itself from the dealer. The dealer will try to sell you the car plus other added services including financing, insurance, accessories, extended warranty etc. As I wanted to develop relationships with the dealer/ service providers I spread my purchases from a few of them, thus giving each one of them a part of my deal. In this way, none of them made a lot of money (I hope) directly from me, but all of them made something from me.

b) Get an indicative pre-approved finance even before shopping for a car. You can do all your homework in terms of repayment, deposit, balloon payment and interest rates before you even buy the car provided, you have set a budget based on your capacity to pay. There are many financing brokers who can also sell you all the required services including insurance, extended warranty etc. as well. Always check the actual cash outflows rather than relying on the interest rates provided. I got a lower repayment despite having a higher interest rate quoted as the methodology used in computing interest differs from different financiers.

c) Sell your car directly yourself rather than trading in, through the dealer, the price could be as much as 50-100% of what the trade in value is as given by the car dealer. The internet is a useful tool to reach out to other used car buyers nowadays.

d) There is a lot of margin in all the products and services sold regardless what the dealer or sales person tells you. For e.g. when I bought a "gap" insurance for my car, the premium for this insurance policy was around $950, but the agent received 42% commission from the premium. In terms of price of the car, there are also car brokers who can source cars from you. Some of their websites even provide indicative prices which is way below the recommended retail price and could guide you as to how low you can go.

e) When negotiating financing, try to get as much flexibility in the repayment terms i.e. ensure there is low or no penalties for early repayment or cancellation of the loan

f) Do not be afraid to walk away or try a new dealer or service provider. Competition is very keen and as buyer, you have the power to make sure your money is working for you. Don't be afraid to ask, ask and ask for more.

g) When buying a new car, always shop towards the end of the month or better still, end of a calendar quarter or financial periods. Dealers have quotas, targets, incentives etc. which are set at the end of a period and, try to buy cars off their stocks, sitting at the car yards. They have more financial interest to get rid of them quickly as car sitting on the yard, does not earn them income. Ordering a car will not give you the leverage needed to negotiate a good deal as they are customised to your specific requirement.

I do hope the above are useful for those shopping for a car. Good luck.