Car Buying Guide: How to buy a car

Find out what to look when buying a car and compare finance options now.

A car is likely to be one of the most expensive purchases you ever make, so it pays to make sure you get it right.

Read our guide on how to buy a car, including what to look for and where to buy one, and compare your car loan options below.

IMB New Car Loan

IMB New Car Loan

5.89 % p.a.

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6.24 % p.a.

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  • No monthly fees
  • No early repayment fees
  • Borrow up to $75,000
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IMB New Car Loan

A low rate loan to finance new vehicles or cars up to two years old. Borrow up to $75,000.

  • Interest rate: 5.89% p.a.
  • Comparison rate: 6.24% p.a.
  • Interest rate type: Fixed
  • Application fee: $250
  • Minimum loan amount: $2,000
  • Maximum loan amount: $75,000
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Compare car loans

Rates last updated April 20th, 2019
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Product Description Monthly Repayment
IMB New Car Loan
5.89% (fixed)
6.24%
$2,000
1 to 7 years
$250
$0
You'll receive a fixed rate of 5.89% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.
Latitude New and Used Car Loan
From 6.99% (fixed)
8.1%
$5,000
1 to 7 years
$295
$10
You'll receive a fixed rate between 6.99% p.a. and 14.99% p.a. based on your risk profile
Apply for a loan from $5,000 to finance a new or used car. Flexible repayments and options to finance a classic car.
Beyond Bank Low Rate Car Loan
From 5.69% (fixed)
5.97%
$25,000
1 to 7 years
$175
$0
You'll receive a fixed rate of 5.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
Loans.com.au - New Car Loan
5.44% (fixed)
5.99%
$5,000
3 to 5 years
$400
$0
You'll receive a fixed rate of 5.44% p.a.
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment.
Stratton Finance New Car Loan
From 5.34% (fixed)
6.6%
$7,500
1 to 7 years
$459.20 (for private seller vehicles this fee is $608)
$8.90
You'll receive a fixed or variable rate depending on the lender you are approved with
Apply for up to $150,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.
RACV New Car Loans
From 5.99% (fixed)
6.55%
$15,000
1 to 7 years
$399
$0
You'll receive a fixed rate of 5.99% p.a.
A larger loan of $15,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees. Note: Product only available to residents of Victoria.
Credit Concierge Car Loan
From 4.99% (fixed)
6.23%
$10,000
1 to 7 years
$350
$5
You'll receive a interest rate from 4.99% p.a. with a comparison rate from 6.23% p.a.
Get access to over 20 providers to fund a new or used car.
Westpac Car Loan
From 8.49% (fixed)
9.67%
$10,000
1 to 7 years
$250
$12
You'll receive a fixed rate of 8.49% p.a.
Finance a new or used car and benefit from convenient features for car buyers including a car search tool and the option to borrow extra for on-road costs.
St.George Secured Personal Loan - Fixed Rate
From 8.49% (fixed)
9.6%
$3,000
1 to 5 years
$195
$12
You'll receive a fixed rate from 8.49% p.a. based on the value of your car
Get a competitive rate and apply for a larger loan up to $80,000 when you attach a new or used car as security to the loan.
IMB Secured Personal Loan
6.89% (fixed)
7.24%
$2,000
1 to 5 years
$250
$0
You'll receive a fixed rate of 6.89% p.a.
Benefit from this competitive rate by securing the loan with a vehicle up to 6 years old. Use this flexible loan for any purpose.
Latitude Personal Loan (Secured)
From 12.99% (fixed)
14.2%
$3,000
2 to 7 years
$250 (Loans under $4000 - $140)
$13
You'll receive a fixed rate between 12.99% p.a. and 28.99% p.a. based on your risk profile
Lock in a competitive variable rate when you offer security. Loan can be used for any purpose and repayments are flexible.

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What car should I buy?

With the number of cars on the market, it can be hard to find the one that's right for you. Before you start comparing vehicles, it's important to understand how much you can spend, as well as the features you're looking for.

What’s your budget?

How much are you willing and able to spend on a car? Ideally, you’ll be able to set yourself a clear price ceiling and decide straight away whether you’re looking for a new or used car.

  • If you have a limited budget, you may want to consider a used car or demonstrator model.
  • If you’re flexible on price, you might try listing your must-have features first.

What features do you need?

You should have a general idea of how you plan on using the car, and the features you'll therefore need. These include:

  • The number and size of seats. Many sports cars are limited to two seats, and some smaller cars may be too cramped to comfortably fit five people. If you want more than five seats, you can narrow your search down a lot further and look at SUVs or people movers.
  • Fuel-efficiency. Hybrid, electric and smaller vehicles are likely to be more fuel-efficient, which can help keep your driving costs down.
  • Storage space. Hatchbacks and smaller cars will have limited boot space, which may be an issue for families or those looking to use the car on trips away.
  • Where you'll use the car. If you're planning on going off-road you might limit your search to 4WD or AWD vehicles. If you will mainly be driving in the city, a hatchback or smaller car may be more appropriate.
  • Additional features. While most new cars will come with aircon and power windows, there are other features such as Bluetooth, parking cameras and in-car screens that may be worth considering.

By working out the features you need, you can narrow down the type of vehicles you'll want to compare. Once you've identified a shortlist of potential cars, you'll want to research them further, by checking out their specs and reading car reviews.


Where can I buy a car?

There are a number of places you can buy a car, but most vehicles are bought from car dealerships or from private sellers.

When you’re buying a car from a licensed dealership, the seller is legally required to disclose any major issues with the car and will often be required to solve defects or problems with cars they sell.

When you’re buying a car elsewhere, it’s generally your responsibility to inspect the car thoroughly in order to make sure there aren’t any serious issues with it.

Where to buyHow it worksWhat it’s good for
Dealership (new car)Walk onto a car lot and shop for a new carGood for checking out a wide range of options, test driving each of them and getting some expert advice.
If you want a new car and want to see a lot of options in one place, this might be the best choice for you.
Dealership (used car)Visit a used car dealer to see what’s availableGood for finding a lot of relatively affordable options all in one place.
If you’re after a used car but want the flexibility to shop around on the lot, or you're not confident going to a private seller, then this might be the best option for you.
Private seller (used car)Buy a used car directly from a private seller, typically the previous ownerIf you’re after the best price possible, then buying used from a private seller is often the way to go.
Make sure you know how to check the car thoroughly before buying, including its service history.
Demonstrator vehiclesBuy a lightly-used newer model vehicle that’s been used for test drives, demos and other light purposes by a car dealershipThis might be a good option if you want to buy almost-new rather than brand new and want to get a good price on a recent make and model.
However, the savings can vary and your options will naturally be more limited, and demo cars might be fitted with extras that you don’t necessarily want but will have to pay for anyway.
Imported carsImport a car from overseasIt’s safe to say that this will never be the cheapest option as it involves a range of additional taxes and expenses. However, sometimes it might be the only way to get a vehicle that isn’t available in Australia.
Car auctionsBid on vehicles at an auctionThis can be one of the most affordable ways to buy a car – it’s so good that car dealers often buy their stock at auctions.
The downside is that the quality of auctioned vehicles and the quality of their discounts can vary, so you need to have a good sense of how much a car is worth and how to properly inspect it in order to get a good price. Also, you typically won’t be able to take the car for a test drive.
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How to get the best deal

The number one tip is to know how much a car is worth. Look up the value of the make and model beforehand, so you have a ballpark figure to work with. If someone asks for more than that, you can ask why it’s so expensive and haggle for a better price.

From there, familiarise yourself with the different options and features you can get with the car. Decide which ones you want and which ones you don’t and make sure to ask the seller if the car has any of the features you're after.


How do I inspect a car?

If you're buying a new car, you might just need to do a test drive to check that it’s right for you.

For a used car purchased from a private seller, you’re going to want to give it a thorough inspection, or take it to an independent mechanic for a check before buying.

Checklist for inspecting a used car

You’re looking for anything you’ll have to fix yourself, any damage that means it’s a dud and any red flags that might indicate that the seller isn’t being honest.

Visual inspection

Check:

  • There are no signs of previous accidents, hail or other damage, and no chips or imperfections in the paint. You should know about every scratch on the car before buying.
  • For improper sealing: Pop the hood, open the trunk and try all the doors and windows. It should all work smoothly and evenly.
  • For panel irregularities: All body panels and doors should be flush.
On the inside:
  • Pay special attention to the electronics and check that all the functions work.
  • Check the condition of all the upholstery.
  • Check that all the lights are functioning.
  • Ensure that the windows, air conditioning, audio and all other electronics are working.
  • Where possible, lift the carpets and look inside the doors for any signs of damage or repairs.
Other things to look for:
  • Paint. A new paint job on an old car might be hiding something and you’re generally better off with the original paint. Watch out for any signs of painted-over imperfections, bubbles under the paint and mismatched paint on adjacent body panels.
  • Tires. If you’ll have to replace the tires after buying, then factor that into the cost and don’t pay too much for the car. Tires should also wear down evenly. If they’re not evenly worn then there may have been a previous accident or the car might have other problems.
  • Glass. This can be expensive to replace, so pay special attention to any chips or cracks in the windows, indicator lights, mirrors and anywhere else.
  • Under the car. Don’t forget to inspect under the car. Rust often starts here, so look out for any signs of corrosion or other damage.
The engine

Turn on the engine to test it properly.

  • Warm up the engine by letting the car idle for a few minutes, then give the accelerator a quick push. If you see a puff of smoke then you might be looking at piston or valve stem problems.
  • Let the car stand for a while and check for oil drips or wet surface residue on the surface of the engine and under the car.
  • Check the water in the radiator. It should be clean and free of oil.
  • Check the oil filter caps. A creamy white substance there probably means a cracked cylinder head or leaking gaskets.
The test drive

As you drive, check that:

  • You can change gears smoothly and quickly.
  • The engine power is appropriate for the car.
  • The car tracks in a straight line and doesn’t drift. The car shouldn’t pitch on corners and the steering wheel shouldn’t pull or try to straighten itself unduly.
  • The brakes respond effectively.
  • The electrics, dials and other interfaces are all working properly and the speedometer is working accurately.
  • The temperature dials, car engine light and all other indicators are not showing problems.
  • There is no irregular engine noise.
  • You’ve paid attention to the suspension and transmission.
  • The exhaust emissions are reasonable.
  • All the headlights, tail lights and interior lights work.
The documents and information to get

You’ll want to get:

  • The car’s CTP insurance details. You should not test drive a car on public roads if it doesn’t have CTP insurance or is unregistered. Ask to see the certificate before taking it for a test drive and check that the certificate details match the vehicle.
  • The VIN. This unique 17-digit code will generally be on the inside of the driver’s door. Record it for later if you plan on buying in order to check the car’s history.
Checking the car’s history

If a car passes the inspection and test drive, the last thing to do before buying is to check its history. Unfortunately there’s a very good chance it won’t pass a history check. But that’s exactly why you need to do it.

You’re checking two things in particular. The first is whether there’s any finance owing on the vehicle and the second is its service history, including previous repairs and whether it’s ever been reported stolen or written off.

  • PPSR check. This is how you check whether a vehicle is encumbered. With the car’s VIN number you can easily do it for free. If a vehicle is still under finance it usually means the seller bought it with a car loan and is now trying to sell it before the loan is paid off.
  • Service history. You can also do this yourself for free, but you may not be able to get the full results.

If you don’t want to DIY, you can pay a car history service to check these for you. It generally doesn’t cost much and usually includes both a PPSR and service history check.

Making the purchase

When buying a used car from a private seller, you’ll need to transfer ownership to make it official. You should generally get all relevant documents at the time of purchase, including:

  • Vehicle registration
  • A PPSR notice if applicable

The seller will need to inform the state road authority that they’ve transferred registration and ownership of the vehicle and you will need to accept the transfer. This can generally be done online through your state motor authority.

What if I find a problem?

A new car should be pretty much perfect. If a brand new car has any flaws, that should at least entitle you to a discount, or the dealer should offer a solution.

If you find any damage in a used car, you’ll have to decide whether you can live with it or if you'll need to get it fixed. A scratch might not bother you, but any mechanical problems, worn tires or anything else that needs fixing might be a deal-breaker.

Factor in any repair costs that you’ll need to pay and add them to the “sticker price” to get a sense of how much you’ll really be paying. If it comes out too high and the seller won’t budge on price, it might be time to walk away.

If it’s a problem that the seller has tried concealing, such as if you spot any painted-over rust spots, then you’ll want to think twice about whether or not you really know what you’re buying. Similarly, you probably don’t want to buy a car from a private seller if they refuse to let you take it to an independent mechanic for an inspection.

If a car is under finance then the seller should mention this. Ideally, you won’t buy an encumbered vehicle, but you can if you want. You’ll need to have a plan for the finance, however, it’s not your problem until you buy the car so the ideal option might be to make sure the seller takes care of it.

If a car has previously been written off then you shouldn’t buy it, even if it seems fine. It’s almost certainly not as fine as it seems.

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How can I pay for my car?

You have a lot of choices when it comes to financing your car. Sometimes you’ll sort it out before finding your vehicle and sometimes you’ll pick out your car and then sort out the finance.

There may end up being thousands of dollars difference between financing options, so it's important you understand how each option works before committing. Find out what finance options are available below and compare the pros and cons.

Paying for the car outright

You can use your existing savings to cover the cost of the car.

  • There’s no need to pay interest when you pay it all upfront.
  • You need to have enough saved.

Dealership finance

You can fund your car directly through the dealer. The dealer secures finance on your behalf and you then make regular repayments to cover the purchase of the vehicle.

  • It can be convenient to get finance from the same place that you buy the car.
  • It might not be the most cost-effective choice. Dealers will be looking to make money on the deal, and you may be able to get a better deal elsewhere.

Regular car loan

You can apply for a car loan with a range of banks, credit unions and non-bank lenders. You borrow what you need to buy the car and then repay the loan over a set term, plus interest.

  • There's a wide range of options. For example, a good credit applicant might get more competitive rates, or you might choose to borrow only the amount you need and pay the rest with savings. You can also consider the loan terms and conditions at your own pace, outside the car dealership.
  • You'll need to meet certain eligibility requirements. Most lenders will require that you're over 18 years old, an Australian citizen or permanent resident and currently employed.

Finance from a car loan broker

You can also use a broker to help find you a car loan through their network of lenders.

  • They will find loans that are suitable for your situation. For example, bad credit applicants who keep getting knocked back by lenders might have more luck going through a broker.
  • Brokers generally charge additional fees for their services.

Pre-approved car loan

This when you get approval from a lender for a certain amount before selecting a vehicle. You can then use the funds to cover the cost of the car you want.

  • It helps you to know where you stand and how much you can borrow.
  • You might borrow too much or too little. If the car you choose won't be covered by the loan amount, you'll need to find additional funding, and if you borrow too much, you'll be stuck paying unnecessary interest.

Novated lease

A finance option for employees that allows them to lease a car using their pre-tax salary.

  • You will reduce your taxable income and save on tax.
  • Your employer will need to approve the lease.

Chattel mortgage

This is a business vehicle finance option that lets you lease a vehicle while taking immediate ownership.

  • Chattel mortgages may be more flexible and provide tax benefits.
  • It’s only available for business vehicles.


What extra costs should I budget for?

The sticker price of the car itself is the main expense, but not the only one. You’ll also want to make sure you have enough to cover all related expenses, both during and after purchase.

Additional costs when buying

  • Stamp duty: This is a type of tax. When you buy new or used from a dealer it’s generally built into the sticker price, but when you buy from a private seller, stamp duty needs to be paid when transferring ownership. You’ll typically see this as a “dutiable value” field on the transfer documents. The amount can vary widely, but for a typical used car, one might expect to pay around 3% in stamp duty. See how it works in each state to find out how much you’ll have to pay in stamp duty.
  • Extras and modifications: The price you get at a dealer will depend largely on which features and extras are thrown in. This can turn the price thousands of dollars either way. Generally, it might be a good idea to turn down any extras you don’t want in order to keep costs down. The same might be true when buying used from a private seller with a modified car. If you don’t care about the mods, you might want to give it a miss to avoid overpaying.
  • Registration: For new cars, you’ll have to pay a fee to register it. And if you’re buying used, you’ll need to pay a fee for the transfer of registration/ownership (generally around $20 to $30 depending on the state). The cost of renewing your registration or registering a new car varies widely depending on your state, whether you can get any concessions and other factors.

Additional costs after buying

  • CTP insurance: Compulsory third party (CTP) insurance is the mandatory car insurance to help cover the cost of injuries sustained on the road. It works differently and costs vary depending on your state. In all states except NSW, it can be attached to your car registration and built into the cost of new and renewed registrations. In NSW your CTP insurance takes the form of a separate “green slip” and you can shop around for better prices from different insurers.
  • Additional car insurance: It’s not mandatory, but additional car insurance is generally a good idea. The cost can vary widely depending on the type and quality of cover, the insurer and your personal circumstances.
  • Maintenance and fuel: It’s worth planning for operating costs. The cost of fuel and routine car maintenance will depend on the type of car and how much you drive.
  • Car loan repayments: If you’re not careful these might become a major headache. You should know how much the repayments will cost before taking on a car loan.

In some situations, you’re likely to encounter other miscellaneous expenses too. For example, the luxury car tax (when buying a particularly expensive car), licence plate transfer fees (if you’re buying the plates from the old owner – more if they’re custom plates), stamp duty on the cost of your car insurance (built into your insurance payments) and more.

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Are cooling off periods legal? Can I get a refund?

It’s always a good idea to understand your consumer rights when making a big purchase.

The main ones to know are:

  • Cooling off period. This is how long you have to change your mind and get a refund after buying a car. It works differently in each state.
  • Your car warranty rights. All cars bought from a licensed dealer in Australia, both new and used, will come with a consumer warranty to cover defects and failures shortly after purchase.

Cooling off periods

If you change your mind after buying, such as if you realise you can’t afford the financing or that you just got a bad deal, then you have a limited time to contact the dealer in writing, cancel your agreement and get a refund.

This period of time is the “cooling off period”. It works differently in each state, but in all cases, the cooling off period will only apply to purchases from licensed car dealers. It is not available when buying at an auction or from a private seller.



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Car Loan Offers

Important Information*
IMB New Car Loan

You'll receive a fixed rate of 5.89% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.

Latitude New and Used Car Loan

You'll receive a fixed rate between 6.99% p.a. and 14.99% p.a. based on your risk profile
Apply for a loan from $5,000 to finance a new or used car. Flexible repayments and options to finance a classic car.

Beyond Bank Low Rate Car Loan "Special Offer"

You'll receive a fixed rate of 5.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.

Loans.com.au - New Car Loan

You'll receive a fixed rate of 5.44% p.a.
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment.

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