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Buying a car

Read this before you walk into the dealership


The car dealership: home of the sharply-suited salesman trying to sell you a car before you can walk out the door. Is it really like this?

Don’t be fooled by the urban myths. You can come out of a car dealership experience scoring a great deal on your new wheels. You just need to put yourself in a strong position and be prepared for the purchase.

Know what you want

Do your research

There’s no point negotiating a car sale without first having a clear picture of what you want. With your research done, you’ll save time and know how much your chosen car model is worth and that it’s just what you need. Try our car shortlist template to rank the cars you’re looking at.

Paul Johnston is a Corporate Partners & Motor Dealers specialist at Suncorp Group. In a previous life, he worked at car dealerships — so he understands the process inside and out. He suggests thorough preparation; “Narrow down the choice of vehicle so you don’t get overwhelmed by dozens of makes and models."

Paul advises new buyers, “If you don’t have much experience in buying cars, you can get caught up in the emotion of the experience. A significant percentage of customers buy a different vehicle to what they set out to purchase.”

When it comes to the car salesman stigma, Paul firmly believes that times have changed: “The idea that car salespeople are dodgy has eroded significantly over the last ten years. This stigma can still sit in the customer’s mind, but it isn’t really the case anymore.”

Selling your existing car

If you’re replacing an existing car, think about whether you’ll trade it in or sell it privately, and do your research to work out what it’s valued at. For a successful trade in, you’ll need to understand the realistic value of your current car. You can find this information online by researching similar makes and models. Keep in mind these are the “asking prices” and not necessarily the selling price. Condition and mileage are key factors in your car’s value.

Understand how long you intend to use your car

You should also consider how long you plan to keep your new car. If you’re likely to have it for more than 5 years, then factors such as build and compliance plate dates are of less importance. Think about annual mileage, too. Do you want to trade in every three years (where resale value becomes more important) or are you planning on keeping the car for its useable lifetime?

Plan your finances

If you’re preparing for a new car purchase, finance is at the crux of it. There are plenty of decisions to be made: Have you saved enough to pay in full or will you apply for a loan? Will your employer or business be contributing to your car costs? Do you need to compromise or can you afford your dream car?

Kylie Fletcher is a specialist in financing car loans, with experience working with both a major car financial services company and Suncorp Bank as a product manager. She points out a few customer pitfalls when it comes to car loans and has some helpful tips to keep your finances on track.

Work out your budget

Kylie's first tip is to understand what you can afford. To do this, calculate what your loan payments will be (the monthly repayment multiplied by the number of repayments), factoring in interest and fees. This will help you to gain a better understanding of the true cost of your loan.

Kylie says, “People regularly misunderstand fees. They tend to focus on the interest rate, which is only one factor in the cost of your loan. You also need to consider the establishment fee and the account keeping fees. These can vary enormously from loan to loan. Be careful you don’t overlook them.”

Be aware of your repayment obligations

With a car loan, it pays to put your Nostradamus hat on and think about the future. For her second tip, Kylie suggests being aware of early exit payments: “Think of it like your mobile phone plan and how expensive it can be to get out of your contract early. It can be a similar experience with your car loan if you’re not careful.”

Finally, Kylie recommends obtaining a full understanding of your obligations and potential fees before signing on for a balloon payment. A balloon payment — where you lower your repayment fees in exchange for a high lump sum payment due at the end of the loan — can be a suitable option for customers in some circumstances, especially if the value of your vehicle exceeds the balloon — though this is rarely the case.

Discover Suncorp’s Car Loans

Be prepared to walk away

Steve Green, Partner Success Manger at Suncorp Group previously worked in the car industry for over 16 years so he knows a thing or two about the car buying and leasing processes. Working for a major car leasing company, he looked after large corporate and government accounts but he’s also sold cars directly to new buyers.

To help plan your visit to the dealership, Steve has some helpful advice, “The start of a new calendar year through to February and early March are generally good times to buy a new car because the dealership will be trying to clear the previous year’s compliance plate models.” This, and the lure of an increased bonus for the dealer could mean some cash savings without having to haggle as much.

Steve’s advice is to stick to your budget. “You have to be prepared to walk away if the deal doesn’t meet your requirements. Remember that the dealership wants your business, but at the same time, it’s not all about the price,” he said.

Try to keep realistic expectations while playing it a little bit cool. If you’re offered a sale price of $35,000 and you counter at $33,000, it’s best to wait for the dealer to respond before going any higher.

Being prepared before you step into a dealership is the smart way to set the wheels in motion.

Explore Our Car Finance Guide

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Loans are provided by Suncorp-Metway Ltd ABN 66 010 831 722 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Terms, conditions, fees and charges apply and are available upon request.

Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Information Document before making any decisions about whether to acquire a product.

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