Better Ways

The golden rules of buying from car dealerships

Line up of new cars

You’ve decided you want a new or near new car. It’s easy to get carried away with all the excitement; you might be tempted to buy on impulse. And the car dealerships know that. But don’t get carried away. For most, your car is the second biggest investment you’ll make in your life (after your house). Doing some homework, getting savvy to dealer tricks and learning to negotiate can save you thousands.

Before we give you the vital tips to getting the best deal, let’s talk about the biggest waste of money to avoid – a ‘junk’ insurance policy. This is the add-on the dealership sells you for hundreds or thousands of dollars but offers no real benefit, in your moment of weakness and excitement.

On 1 July 2016, Toyota, Australia’s number 1 car manufacturer, sent customers with its Toyota’s novated lease insurance policy a Supplementary Product Disclosure Statement (SPDS). The letter includes the advice that “insurance purchased this way is often more expensive than similar cover purchased through other methods”.

Take a read of the highlighted areas below. This is the type of deal to avoid, a bad one.

Toyota PDS

What should you watch out for, according to the Consumer Action Law Centre?

  1. A salesperson or lender that tries to pressure you into buying an extra product you haven’t asked for.
  2. In some circumstances, a lender can require you to buy insurance to get a loan. But remember, you don’t have to go with the insurer that the salesperson suggests.

If you think you’ve been sold a ‘junk’ insurance policy – take a look a the Consumer Action Law Centre’s campaign called “Demand A Refund” to see if you are eligible for a refund. $230,000 in refunds have been requested through their campain, with many being successful.

If that hasn’t scared you off buying a new or newish car, here’s what you need to know.

Ways to get the best deals

  1. Buy ”soon to be old” car – there are bargains to be had when car yards are looking to sell soon to be replaced models.
  2. Look at comparison rates – finance from the dealership might not be the best option, so compare with other lenders.
  3. Negotiate extras – dealerships have wiggle room on these, so have a list of extras that would sweeten the deal.
  4. Read extended warranty fine print – make sure that you understand what is covered, and more importantly, what is not covered.

Best time to buy

  1. On weekends – A busy car yard having other buyers
  2. End of Financial Year sale – Mid-year promotions often see cars sold at a low drive-away prices or heavily discounted finance to bump up sales.
  3. Last month of quarter – car salespeople have sales targets to reach. You might be the remaining sale they need to receive their bonus.
  4. New model release – when older stock makes way for new.

Our Top 5 insider tips about buying a car

  1. Cooling-off – One day cooling-off period applies unless purchasing a new car, buying at auction or taking delivery of it immediately.
  2. Statutory warranty:
    • Most new cars have a warranty of 12 months or 20,000km, whichever happens first. Generally, new cars come with a manufacturer’s warranty that exceeds the statutory warranty.
    • For used cars, the warranty depends on the on the vehicle´s age and odometer reading:
    • Three months or 5000 km, whichever happens first, for cars with less than 160,000km or manufactured fewer than 10 years prior to sale.
    • One month or 1000 km, whichever happens first, for cars with more than160,000 km or manufactured more than 10 years prior to sale.
    • Statutory warranty repair requests must be advised in writing.
  3. Repairs outside of warranty – Cars requiring premature repairs through no fault of your own – check forums for reports of a similar fault and contact the manufacture to request free-of-charge repair.
  4. Extended warranty – May require servicing to be completed within specified intervals. Not always transferable on used cars. Read the fine print to understand what you’re covered for.
  5. Recalls – Visit Product Safety Recalls website prior to purchasing a used car or if significant repairs to the vehicle are required.

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