Best new cars under $20,000

10 tips to save money when you buy a car

• Buy a demo or nearly new car. Buying a dealer demo model car (a car the dealer used for test drives) or a model that's around a year or two old could save you quite a bit of cash because you let someone else pay 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 money.
• Use a car buying service. Once you know which model you want, use a car buying service to help you access fleet-level, bulk-buy pricing. On average, these services can save their customers up to 10% of the purchase price.
• Shop around for offers. To find the best $20,000 car deal around, you're going to need to do some digging. Previously, we've found some great deals when we looked through the offers pages on car makers' websites. However, with chip shortages affecting supply, you'll have to trawl through the car sales sites and consider out of state dealers. They might be able to deliver the car, all for a reasonable price.
• Stick to the rule of 3. If you're buying in person, visit at least 3 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 2016 report from the Australian Securities and Investments 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 favourable and less favourable times to purchase a car. One is visiting a dealership at the end of the month when salespersons are trying to hit their targets. Another is that you should visit on a Monday or Tuesday when dealerships tend to be 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 cut-price specials. 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. Car dealers 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 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 easiest sells for them is metallic paint, which usually costs around the $500 mark. If you're willing to go for one of the limited free paint colours (typically only 1 or 2 solid colours like White and Red), you could save money.
• 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.
• Negotiate. Finally, negotiate with a dealer – doing so could save you money. At the least, you could get some nice freebies thrown in. Even if a dealer won't agree to a lower price, you could ask them to throw in metallic paint, floor mats or just a full tank of fuel, as a little cherry on top.