Consider all payment options - cash, car loan, novated lease or dealer finance - to find what best suits your situation.
Factor in extra costs like stamp duty, registration, insurance and servicing when setting your car budget.
Know your rights, including cooling-off periods and refund rules, before signing a contract.
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.
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.
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 (some will seat up to 8).
Fuel-efficiency. Hybrid, electric and smaller vehicles tend 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.
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 buy
How it works
What it's good for
Dealership (new car)
Walk onto a car lot and shop for a new car
Good 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 available
Good 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 owner
If 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 vehicles
Buy a lightly-used newer model vehicle that's been used for test drives, demos and other light purposes by a car dealership
This 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 cars
Import a car from overseas
It'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.
This 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.
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.
End of financial year (EOFY).End of financial year sales can mean big discounts on cars, extras and even interest-free deals. Dealers also clear out ex-demonstrators, which can save you thousands.
The end of the month or quarter. Salespeople are chasing targets and commissions, so you’ll likely have more negotiating power.
The beginning or end of the year. Cars built earlier in the year can be harder to sell once new stock arrives. If the build date is old, dealers may offer better deals to clear them.
Model run out time. When a new version of a car is released, the outgoing model drops in demand—good news for your bargaining power.
A Monday or a Tuesday. Avoid the weekend rush. Dealerships are quieter on Mondays and Tuesdays, giving you time and space to negotiate a better price.
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.
Finder survey: How many Australians know how to test a car battery?
Response
No
65.81%
Yes
32.6%
I have never driven before
1.59%
Source: Finder survey by Pure Profile of 1006 Australians, December 2023
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 flawless. If it’s not, you’re within your rights to ask for a fix or a discount.
For used cars, small things like scratches might not be a big deal - but mechanical issues, worn tyres or hidden damage can cost you. Factor any repairs into the total cost. If it’s too expensive and the seller won’t budge, walk away.
Watch out for signs of hidden problems (like painted-over rust). If a seller won’t let you get an independent inspection, that’s a red flag.
If the car still has finance owing, the seller should tell you. You can buy a car under finance, but ideally the seller pays it out first to avoid any legal headaches.
Avoid buying any car that’s been written off, even if it looks fine - it probably isn’t.
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.
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.
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.
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 government tax is usually included in dealer prices, but if you’re buying privately, you’ll need to pay it when transferring ownership. It’s based on the car’s value and is often around 3% for used vehicles. The exact amount varies by state.
Extras and modifications. Dealers often offer optional extras, but these can add thousands to the price. Stick to what you really need. If you’re buying a modified car from a private seller and don’t care for the mods, it’s probably not worth paying extra.
Registration. New cars need to be registered and used cars come with a small transfer fee (usually $20–$30). The total rego cost depends on your state and whether you qualify for any discounts.
Additional costs after buying
CTP insurance:Compulsory Third Party (CTP) insurance covers injury costs if someone is hurt in an accident. It’s required Australia-wide. In most states, it’s included in your rego cost, but in NSW you’ll need to buy it separately as a “green slip” - and you can compare providers to get a better deal.
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.
Depending on the car, you might run into extras like luxury car tax (for high-end vehicles), plate transfer fees (especially for custom plates), and stamp duty on your car insurance (usually included in your premium). These can all add up, so it’s worth factoring them in.
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.
The cooling off period is one day and usually ends at 5pm the day after purchase.
It only applies to cars purchased under linked finance. This is when the financing is provided or facilitated by the car dealer. For example, if they either offer a loan themselves or refer you to a third party.
It is waivable. You can agree not to have a cooling off period if you want.
A fee of the lesser of either $250 or 2% of the purchase value applies if you cancel within the cooling off period.
It is available for both new and used cars.
The cooling off period is three days from the day of purchase, excluding weekends and public holidays. You can terminate your agreement within this time period by contacting the seller in writing.
It applies to most personal motor vehicle purchases made from licensed motor car traders.
However:
The cooling off period will end immediately once you take possession of the car.
A fee of the greater of $400 or 2% of the purchase value applies if you cancel within the cooling off period, or $100 or 1% for a sale that takes place off-site, such as if a dealer delivers the car to your workplace.
It's only for personal purchases. There is no cooling off period for vehicles purchased in the name of a company or a body corporate, or if it's classified as a commercial vehicle.
You have three days from the date of purchase to change your mind. Termination of the agreement must be done in writing.
The cooling off period only applies to purchases from licensed dealers.
Deposits may not be fully refundable.
The dealer is entitled to keep the greater of either 1% of the purchase value or $100.
In Queensland, the cooling off period only applies to used cars purchased from licensed dealers.
It is for one business day and ends as soon as you drive away with the car (except if you're just test driving it, or taking it to a mechanic for an inspection). Within this time, you can cancel your agreement in writing, in person, by mail or by fax.
There is no cooling off period for new cars.
It ends at 5pm the day after purchase or as soon as you take possession of the car. If the dealer closes before 5pm, it's pushed back a day.
There is no fee for exercising the cooling off period. Instead, the dealer can charge a non-refundable deposit of up to $100. If you go ahead with the sale then this amount is taken off the purchase price. If you cancel the contract then the dealer may keep some or all of the deposit.
There is no cooling off period on consignment vehicles. This is when the dealer is selling a car on behalf of someone else (generally the previous owner). The dealer must tell you that it's a consignment vehicle and that the cooling off period doesn't apply.
If you've traded in your old car as part of the agreement, the dealer will have to return it to you if you exercise your cooling off period rights.
The cooling off period is two business days. It only applies to second-hand cars and demonstrator vehicles. During this time you can cancel the contract in writing.
If you want to take possession of the car immediately you can waive your rights to the cooling off period by signing a waiver form.
There is no cooling off period when purchasing new vehicles, buying at auctions or purchasing from private sellers.
The dealer can ask for a deposit of 10% of the purchase price. If you cancel the agreement under the cooling off period, the dealer can keep an amount equal to the lesser of either 2% of the purchase price or $100.
During the cooling off period, the seller cannot demand any payment other than the 10% deposit.
There is no cooling off period on motor vehicle purchases in Western Australia.
There is no cooling off period on motor vehicle purchases in the Northern Territory.
There is no cooling off period on motor vehicle purchases in Tasmania.
Frequently Asked Questions
To buy a car using an Australian Business Number (ABN), you will need your ABN registration, proof of income, and business financial statements. If financing the car, lenders may require additional documents such as tax returns and details about your business operations.
To buy a car in Australia, you typically need a driver’s licence, proof of identity (such as a passport or ID card), proof of address, and proof of income if you are financing the car. You will also need to provide a valid CTP insurance policy before you can drive the car.
Financing a car in Australia can be done through car loans from banks, credit unions or specialised lenders. You can choose between secured loans, which use the car as collateral, or unsecured loans, which don't require security but are usually more expensive. Dealership financing and novated leases are other options available.
The most tax-effective way to buy a car in Australia may be through a novated lease if you are an employee, as it allows pre-tax salary deductions for the car payment. Another option is to buy the car under your business's name if you are self-employed, potentially allowing you to claim depreciation and operating costs.
The cheapest state to buy a car in Australia is often the ACT or Queensland due to lower registration fees and taxes. However, prices can vary depending on the type of vehicle, stock availability and the time of year.
Ben Gribbin was an automotive writer at Finder. He is a life-long car enthusiast, bringing many years of experience working with and writing about cars. During his time, Ben has been a freelance writer, editor and reviewer for a number of leading publications across the UK. He was voted the Guild of Motoring Writers Breakthrough Blogger in 2015.
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