New Car Buying Basics


Falling in love: dangerous. Dealers know the more you touch, feel and drive the car, the less likely you’ll be able to resist buying it. Research and negotiate first; get touchy-feely with the object of your desire last.


Buy your car off the showroom floor. Motoring expert John Cadogan has carried hidden cameras into dealerships for national TV to prove this point. “The dealer owns the display cars, and he’s paying interest to have them on site,” he says. These are the cars he’s highly motivated to sell, often at a significant discount. “If you can’t see it, don’t buy it. And if you can see it, negotiate hard – the worst I’ve ever done there is $2000 off the list price.”


When the sales consultant grabs the sales manager, he’ll make you think the deal he’s offered is so sharp he can’t approve it without the manager. The opposite is true – it’s just harder to resist when there’s two of them and one of you. Stick to your guns.


Don’t sign anything without consulting a car broker. Brokers put the car you want out to tender to dozens of dealerships, and they don’t cost you a cent. Diedre Nuttall from Private Fleet says the average discount negotiated by the brokerage on affordable cars is around 15 per cent. Engaging a broker is the only way to ensure you’ve negotiated a red-hot deal. (And if you haven’t, the broker will find you one.)


Assess the real value of your trade-in at Trade-ins are convenient, but Redbook data suggests you almost always get more by selling your old car privately. For example, a 2004 Holden Commodore SV6 in average nick will yield around $13,000 for a dealership trade-in, but if you sell it privately you’ll more likely receive $16,300 – 25 per cent more. On the flipside, private sales can be time-consuming and frustrating.


So-called ‘on road costs’ come in two ‘flavours’: non-negotiable government charges (like stamp duty and rego) and discretionary entries like ‘dealer delivery charge’. Former dealership sales executive Douglas Peterson says dealer delivery charges can be $1500 or more … which is a very expensive fee for washing the car and filling it up with petrol. It’s also completely negotiable.


Peterson adds that dealerships run a profitable sideline in genuine accessories, and they make it simplicity itself to keep adding these to the lease. “Accessories are very good value – for the dealer,” he says. “Many dealers will throw in a towbar and floor mats if they really want the sale.”


The dealer demonstrators (test-drive cars) are great value because a) the on-road costs are already paid and b) they’re still covered by the full warranty. If you can score one of those, it’s usually a real bargain – provided you can live with the colour and specification.


All cars have close competitors. Ferrari has Lamborghini. The Mazda3 has the Honda Civic and Toyota Corolla. Private Fleet’s Diedre Nuttal says the hardest thing in her line of work is assisting customers who don’t yet know exactly what car they want. “People who do more research up front usually end up happier with the car they buy,” she says. It’s amazing what you can find on the web – you can and should short-list the competitors and compare ANCAP safety ratings, fuel economy, power outputs, Bluetooth music-streaming capability and iPod-emulating steering wheel control functionality – as well as which cars demand (expensive) premium unleaded, and which have (cheap, nasty) space-saver spare tyres – way before first setting foot in a dealership. “Set yourself a price point and see how the competition adds up,” she adds.


Take your golf clubs/mountain bike/family to the dealership, and see how well they fit the car. You’re essentially on the cusp of a long-term relationship here – so if Harry Houdini himself would be proud you managed to shoe-horn that bike into your hot little hatch, imagine how old the trick will be in three years’ time. And, if the kids only just fit in the back now, think how much bigger they’ll be in three years. Considering how well the car integrates into your life will save a mountain of potential frustration later.


Shop around for finance. Dealers make their finance a convenient, under-one-roof arrangement, but it’s not always the cheapest deal on offer. Finance expert Ross Greenwood advises people who’ve built up some equity in their homes to consider borrowing against that. And here’s the trick there: make the same additional mortgage payments as you would’ve paid the dealership for the term of the lease. That way, instead of keeping the dealer and the finance company profitable, you’ll make more of a dent in your mortgage. “It can be a very cheap way to finance a car,” he says.


Dealers have stiff sales targets, and they’re accountable at the end of each month. Douglas Peterson says if you arrive on the doorstep towards the end of the month, ready to buy a car that’s in stock now, you’ve stacked the deck well in your favour. “Dealers often take a bath on a car late in the month if it means the difference between making his sales quota or not,” he says.


Salesmen know a test-drive is a way to get you to love the car. If you love it, it’s harder not to buy it. You need to keep telling yourself that the test drive is your one, big veto opportunity. It’s the last part of the process, not the first. If you don’t find the seats comfortable after 30 minutes, don’t buy the car. If you hate the sound system, if you just don’t like the way the cruise control works, or if you think the auto hunts all over the place, or if you hate the B-pillar blind-spot – now’s your chance to put the deal on ice, permanently.


A lap of the dealership won’t tell you much about the new car. (Except that a brand new car feels and smells better than the five-year-old car you’re probably driving now.) Freelance motoring journalist Joshua Dowling says test drives are much more relevant if you retrace, say, the daily drive to the office, or at least part of it. “Drive on roads you know,” he says. “That way you’ll be able to zero right in on, and compare, things like cabin noise, ride quality and general driving performance.”