Buying a new car

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The following information will help you make the right decisions when buying a car.

Before you buy a car

1. Do your research

  • Compare prices advertised in newspapers and on the internet. Go to different car yards.
  • You can negotiate on price, especially if you are buying a used car. 
  • Car magazines and websites can provide information about a car’s performance, fuel costs, safety features and other details.
  • Get information about the ongoing maintenance costs of different cars. For example, imported cars can be more expensive to service or repair.
  • The following resources can provide good information:

2. Shop around for finance and insurance

  • Most licensed motor car traders offer finance. However, this might not be the cheapest or best option for you.
  • Also check the rates and fees of banks, credit unions and other financial institutions that provide loans.
  • Do not sign a contract to buy a car until you have loan approval.
  • While it not compulsory, it is a good idea to get insurance if you buy a car. Insurance protects you against costs if you are in an accident or your vehicle is stolen, damaged or vandalised.
  • You can get insurance from any provider you like. Make sure you add the cost of insurance into your budget.
  • Insurance costs will be different for different types of cars and your driver rating. You may also pay more if you or someone under the age of 25 will be driving the car.

3. Choose the best way to buy a car

  • Generally, most new cars are bought through a licensed motor car trader.
  • However, you can also buy a used car through a private seller or at an auction house. Make sure you choose the option that is best for you.
  • If can sometimes be cheaper to buy a car through a private seller or at an auction, but it is riskier, as you do not get as many legal rights as when you buy from a licensed motor car trader. You may also not be able to inspect the car before you buy it.
  • You get more legal rights if you buy from a licensed motor car trader. For example, you get three days to change your mind after signing a car contract.
  • You also get a warranty when you buy from a licensed motor car trader. A warranty means that you will not have to pay if the car develops certain faults after you buy it.
  • Both licensed traders and private sellers sell cars online. Be very careful about buying a car you have not seen in person.
  • Get the car’s mechanical condition independently assessed by someone you trust before you buy it.
  • Be wary if you see an advertisement online advertising a car for sale at a much lower price than expected. It could be a scam designed to make you pay an upfront deposit to hold the car, when in fact the car does not exist. 

When buying a car 

1. Signing the contract

  • Do not feel pressured into signing a contract. Take time to understand the contract. If you do not understand it, show it to someone who will.
  • Try not to sign the contract the first time you see the car. Take the time to see whether this car is right for you away from the place of sale.
  • If there are things in the contract you do not agree with, discuss them with the seller. It is possible to change contract terms.

2. Changing your mind

  • Remember, if you sign a contract to buy a car with a licensed motor car trader, you get a ‘cooling-off’ period of three business days. This means you have three business days to change your mind about buying the car.
  • If you do decide to change your mind within the three days, the trader can keep:
    • $400 or two per cent of the purchase price, whichever is higher (for new cars), or
    • $100 or one per cent of the purchase price, whichever is higher (for used cars).

3. Warranties

  • Remember, when you buy a car from a licensed trader, you get a warranty. The warranty will help protect you from paying to fix faults that may develop in future with the car. Warranty periods may differ for new cars. There are no warranties on private or auction sales.
  • When you buy a used car from a licensed trader, they must give you a warranty if the car:
    • is less than 10 years old, and
    • has travelled less than 160,000 kilometres. 
  • A used car statutory warranty lasts for three months or 5000 kilometres, whichever comes first. The trader must repair any faults covered during the warranty period in order to ensure the car is in a reasonable condition for its age.
  • Even after the statutory warranty expires, you still have rights under the Australian Consumer Law if there is a problem with your car. However, the level of protection will depend on things such as the car's age and condition.
  • Dealers may also offer extended warranties. These warranties extend the coverage provided in the original manufacturer's warranty, usually at an extra cost. You do not have to take an extended warranty.  

4. Know how much you’re really paying

  • When you buy a car at a licensed car yard, make sure you find out the ‘total’ price. The total price includes extra costs such as stamp duty and registration.

After you buy a car

1. Servicing your car

  • Make sure you service your car regularly. This will help maintain its condition and value.

2. Car repairs

  • When choosing a mechanic, find out if they belong to associations such as RACV and the Victorian Automobile Chamber of Commerce (VACC), whose members must follow a code of conduct.
  • When taking your car in for a service, explain clearly to the mechanic the work that needs to be done.
  • Get a cost estimate upfront, preferably in writing.
  • Sometimes, a mechanic may find other things wrong with the car. Make sure you get the mechanic to call you first before they start doing extra work to the car that you have not authorised. Make sure any quotes are in writing before you agree to those repairs.
  • If you and the mechanic cannot agree on the cost of fixing your car, Consumer Affairs Victoria may be able to help solve the problem. For details, see our Resolve a dispute page

Hire cars

  • If you hire a car, the hire company must make sure that it is of a suitable quality.
  • Make sure you read and understand the car hire agreement before you sign it. If you do not understand it, show it to someone who will.
  • Make sure you know who will be responsible if there is any damage to the car. For example, to what extent will insurance cover costs?