Best new cars under $20,000

Here's how to make your $20,000 budget stretch even further, perhaps even getting you into a higher-spec model.

• Use a car buying service. Once you know which model you want, use a car buying service to help you access fleet-level pricing. On average, these services saved their customers over $4,500!
• Shop around for offers. To find the best $20,000 car deal around, you're going to need to do some digging. We found some great deals when we looked through the offers pages on car maker's websites. Trawl through the car sales sites and consider out of state dealers. They might be able to deliver the car, all for a keen price.
• Stick to the rule of three. If you're buying in person. visit at least three dealerships before making your purchase. That way, you'll be able to play the dealerships' offers against each other and have leverage when negotiating. It helps to have found some similar cars you've found online too, so you can show the dealer what you're expecting and see if they will price match.
• Avoid unnecessary insurance add-ons. A report from the Australian Securities and Investment Commission (ASIC) found that many insurance plans sold by car dealers weren't valuable to consumers, so be careful what you sign up for. Types of insurance to question if they are offered include tyre insurance and loan protection insurance.
• Get the timing right. There are a few schools of thought here. One is that you should visit at the end of the month when dealerships are trying to hit their sales targets. Another is that you should visit on a Monday or Tuesday when dealerships are less busy and there's more time to negotiate. One well-known time to snap up a bargain is the End of Financial Year Sales, as dealerships offer specials to reach their EOFY goals. A final tip around timing is to wait until a dealership is having a model runout sale, when the current generation of a vehicle is about to be replaced by an updated version. Dealerships try to clear out the older stock to make way for the new build and may be more willing to strike a bargain.
• Come down a level. Higher trim grades, with all their cushy passenger comforts and extra tech are tempting. But lower specification levels are cheaper. If you can live without fancy things like leather upholstery and large alloy wheels, you could save thousands of dollars. That might just make a car that you thought was out of your $20,000 price range, easily affordable.
• Ditch the options. Another way dealers make money is by up-selling the optional extras. These quickly add up, inflating the purchase price of a car. One of the biggest sellers is metallic paint, which usually costs around the $500 mark. If you're willing to go for one of the limited free paint colours, you could save money. The downside is you may only have the choice of one or two colours (very often, plain white is a free paint finish).
• Shop around for finance. By shopping around and comparing deals from multiple car loan lenders, you could save hundreds of dollars over a car finance agreement.
• Buy a demo or nearly new car. Buying a dealer demo (a car the dealer used for test drives) or a model that's around a year old, could save you quite a bit of cash. As a plus, you let someone else foot the bill for the first year's depreciation. With demo cars, in particular, dealers often spec these out to a decent standard, so you could get a higher trim, for less outlay.
• Negotiate. Finally, negotiating with a dealer could save you money, or get you some nice freebies thrown in. Even if a dealer won't agree to a lower price, you could ask them to chip in metallic paint, or even just a full tank of fuel, as a little cherry on top.