When buying a car, there are more costs than just the car itself.
You’ll need money for petrol, registration, insurance, parking, road tolls, annual services, and any other unexpected costs like a car breakdown.
If you’ve looked at your budget and are happy that you can afford it, here’s what to do next.
Do your car research
Think about whether you want to buy a new car or a second-hand car. Then decide on the car brand and make you want and start looking online to compare the price and details of cars for sale.
Advertisements (ads) for used cars published by licensed motor car traders are required to have certain information including:
- The letters LMCT and the licence number of the trader (if the ad is for a licensed motor car trader).
- The price of the car (if it's a new car, the price must also include any fees and dealers' charges).
- The registration number, if the car is registered.
- The engine number, vehicle identification number or chassis number of the vehicle or any other number that can identify the vehicle if the car is unregistered.
Consumer Affairs Victoria has information on what to look for when buying a car.
In Victoria there are restrictions on P-plate drivers driving high-powered vehicles. VicRoads has a probationary vehicles database that allows you to search for a car and whether you can drive it as a P plater.
Get the best car price
Once you've found the car you like you’ll want to get the best price so:
- Set a maximum price you'll pay and don't go above it.
- Make your first offer to the car owner or dealer low enough to give you the chance to bargain.
- Offer cash if you can as that might make it more attractive to the seller.
- Check when the registration expires. If the car's registration is due shortly, add the cost of renewing it to the overall cost of the car.
Who to buy your car from
You have three options. You can buy from:
- a licensed motor trader
- a private seller
- at auction.
Buying a car from a licensed motor trader
It might cost more to buy a car from a licensed car trader but you tend to get more protection under the law.
The benefits of buying through a trader, rather than a private sale or at auction, might include a:
- three-month/5000km statutory warranty if the car is less than 10 years old and has travelled less than 160,000km
- title that certifies the car is not stolen and no money is owing on it
- a cooling-off period to cancel the contract, unless you take possession of the car and sign a waiver form.
Consumer Affairs Victoria has information about buying a used car from a trader.
Buying a car from a private seller
Buying from a private seller is often cheaper than a licensed motor car trader but can come with risks.
You don’t get a cooling-off period or a warranty and it’s up to you to check that the car is not stolen and there’s no money owing on it.
The Personal Property Securities Register (PPSR) quick motor vehicle search lets you check whether a car has been stolen or written off (due to previous irreparable damage).
Consumer Affairs Victoria also has advice on how to buy safely from a private seller.
Buying a car at auction
Buying a used car at auction may be cheaper but it's also very risky.
If you buy a used car at auction:
- The car will not be covered by a statutory warranty.
- There is no cooling-off period.
- The car does not require a Certificate of Roadworthiness (RWC).
- You may not be allowed to test drive it before you buy.
Do a car inspection
Don't buy a car if the seller won't let you check it out thoroughly.
When buying from a private seller or a licenced motor trader you can test the car by taking it for a drive.
You can also arrange to get the car inspected by a motor mechanic you trust. The inspection can reveal problems the car has or might develop in the near future. This is important if you’re buying privately because you are not protected by a warranty.
All registered cars must be sold with a current roadworthy certificate that has been issued within the last 30 days.
This applies to licensed dealers and private sales, but not to cars sold at auction.
Never hand over any money until you've seen the RWC, and never offer to get the roadworthy certificate done yourself. It could end up costing you more than the car is worth.
Get car insurance
Once you have bought your car you will need car insurance. This protects against some of the costs and liabilities if you're in an accident. Shop around to find the best car insurance deal you can find.
When you pay your car registration in Victoria each year, part of the cost is a Transport Accident Commission (TAC) charge.
This covers you, or anyone else, for death or injury if your car is involved in an accident.
However, it doesn't cover you for damage to your car or anyone else's, which can be very expensive. This is why you need car insurance too.
Remember to make sure you insure your car before you drive it away.
Types of car insurance
There are three most common types of car insurance:
- Comprehensive insurance covers you against damage to your car, other cars and property, as well as fire and theft. This type of insurance is usually necessary if you borrow money to buy a car. Comprehensive car insurance is usually the preferred option for people who buy a brand-new car.
- Third-party property, fire and theft insurance covers you for damage your vehicle causes to other people's cars and property, and if it catches on fire or is stolen.
- Third-party property insurance covers you for damage your vehicle causes to other cars and property - not yours.
Third-party car insurance is usually the preferred option for first-time car owners who’ve bought a cheaper second-hand car. This is because third third-party car insurance is much cheaper than comprehensive car insurance.
Your policy may be cancelled or your claim refused if you're under the influence of drugs or alcohol when you have an accident. You will also run into trouble if you don't tell the insurer about modifications to your car, previous accidents, prior driver convictions or personal disabilities.
Getting a car loan
If you want to buy a car but haven't saved enough money to pay for it, you might decide to get a personal loan for it.
Interest rates and related fees and charges for loans can vary a lot so make sure you shop around for your car loan.
You don't have to accept the loan option offered by car dealers as they often have high interest rates. You are free to shop around for a personal loan and doing this often ensures that you get the best deal.
Only commit yourself to what you can comfortably repay.
Before you sign up for a loan, make sure you understand:
- the type of loan on offer
- all fees and interest rates, including insurance requirements
- the repayments and interest dates
- the total amount you'll have to pay by the end of the loan period.
The MoneySmart website has information about different types of car loans and our YouthNav website has information on buying a car too.
What if I can't make my car loan repayments?
If you're having trouble paying back the loan, it's important that you talk to the bank or finance company that you borrowed from as soon as possible to work something out. They may be able to arrange a payment plan that works best for you.
The National Debt Helpline has information if you can't pay your car loan.
