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For prospective Australian immigrants (or emigrants – depending on your perspective)

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Buying a car

Back in Europe we had a campervan (Viano Marco Polo) that you can not buy in Australia. So the first idea was to take our car with us to Australia, but you are not allowed to register a left-hand drive vehicle here unless special exemptions (such as vintage cars) apply. So we had to buy a vehicle here.

In Australia, you really can’t get out of purchasing a vehicle, unless the company provides you with a car that you can also use privately.

Buying a car is basically not difficult and similar to Europe, but there are a few things to keep in mind. The legal regulations described below apply to Queensland. There may be deviations in other states of Australia.

Basically, a distinction must be made between new and used vehicles. A new vehicle has never been licensed or registered. Many retailers offer so-called “demo” models. It should be demonstration car, but it is often an argument to offer cars much cheaper then the Recommended Retail Price of the manufacturer. These cars normally have a few hundred kilometers (or just 50) on the clock.

A “demo model” is not considered as a new but as a a used car. For used vehicles, there is a so-called “cooling-off period” or even thinking time, in which one can at any time withdraw from the contract without major disadvantages.

Before (!) one enters the premises of the car dealer, you should absolutely have done your homework and gathered the necessary information on the Internet or out of relevant publications!! This is very important, so that the car-dealer can’t completely pull the fast one on you.

In particular, you should obtain the following information beforehand:

  •      Compare manufacturer websites and their models and prices
  •      Study shopping guides on the Internet, in car magazines and other magazines
  •      Reviews of the brand and the model in question
  •      reliability surveys of the car/brand
  •      Australasian New Car Assessment Program (ANCAP)
Visiting the car-dealer

After being prepared with background information, you are ready for the “fight” with the dealer.

  1. Visit at least three dealers before signing anything. Many sales persons would refuse an offer without hesitation, but would accept the same offer when faced with the price of a competitor. There is always a better deal somewhere and traders know it.
  2. If you look at the shiny new cars in the dealership, you must be aware of one thing: the car-manufacturer has already sold the cars. The dealer bought them. They are his problem now. He bought them on credit and interest rates are hitting his wallet. The interest is payable at the end of the month. He has to reduce his stock.
  3. Do not be tempted by the argument “this deal is only valid today” – resist any pressure until you are 100% happy and ready to buy.
  4. Dealers must give you an all-inclusive rate. Make sure that the offer you receive includes all the costs, such as
    1. The actual price of the vehicle
    2. “Transfer costs”, shipping costs; These fees can vary considerably. Most traders charge between $ 1,495 to $ 1,695, but some try to charge up to $ 3,000. Shipping costs are not the cost to get the car to the dealer, as some dealers claim. In fact, it is the cost that have been “invented” to cover the additional costs of preparing the car for delivery to the customer. In general, this fee is a source of profit for dealers. Therefore, delivery charges are as negotiable as the rest of the price, so be prepared to bargain.
    3. Other dealer fees that must be paid before you can drive off
    4. Stamp duty
    5. Costs of the registration (if necessary transfer of registration with demo cars).
    6. Any additional costs such as window tinting or rust prevention.
    7. Luxury tax if applicable (33% of the vehicle price over approx. AUD 69,000)
  5. The registration (“number plate”) includes compulsory third party insurance (CTP) costs. However, it only includes insurance for personal injury and not for property damage. Therefore you usually need your own insurance. This is often also offered by the dealer. But you do not have to conclude a contract right away, you can do that in afterwards after a detailed insurance comparison. However, until then you have only the protection of the compulsory third party insurance (CTP).
  6. Generally: Beware of extras!
    Do you want mats of the dealer together with the car? What about window tinting, upholstery protection, rust protection or paint protection? Many car dealers will try to offer you all these types of extras. Only a few extras are really worth it. You are usually better off buying them later, if at all. Forget about the additional rust protection, as nowadays all cars are already rust-proof and thus problems are covered by the manufacturer’s warranty. The same applies to optional “paint protection”. Also almost always a special and extremely expensive protection for the car seats or the dashboard is offered. With a can of upholstery protection from the supermarket you can protect yourself and your wallet just as well yourself. And if you want any of these more or less useful extras, you get them much cheaper at specialized workshops.
    Also, be careful when buying extended warranties – they sound good, but car dealers often get more than 50% of your premium as a commission to sell extended warranties. Most claims are limited here and exclusions may apply.
  7. Check the date of manufacture of the car before signing the contract. The dealer may try to sell you a car that was built a long time ago and therefore has been on his yard for some time. If you want a car that has been built in the last six months, say so.
  8. Buy a car at the end of the month. Plan your purchase, but do not sign until the end of the month. Car dealers are working with monthly sales goals, so they offer discounts and free extras towards the end of the month. Car dealers often go hungry for a sale in the last week of a month, so this is a good time to buy.
  9. Traders usually have good deals in January to sell models that were imported the previous year.
  10. Never buy a car without returning to the dealer three times to ask for better terms or a better price. This can put a lot of pressure on you and you are usually at a disadvantage because you will only buy a few cars in your life, but the dealer sells them every day.
  11. Stay realistic with your expectations. You probably will not be able to discount much of an already discounted price. Stay friendly and polite. Good manners go a long way and sometimes it just depends on how much the dealer likes you. Leave your phone number even when you leave. The trader could (and will usually) come back to you with a better deal.
  12. After much negotiation you will be tempted to give the dealer a maximum offer “I can not pay more than AUD XYZ for the vehicle”. The dealer will then offer you a similar vehicle with less equipment for sale, where he can meet your price. If you respond, the process of negotiations will start anew (for a different car).
  13. Avoid answering personal questions. Few sellers ask useless questions. Apparently relevant questions are actual attempts to find out your lifestyle, income, driving habits, etc.
  14. Try not to make your decision based on emotions. If you make your purchase decision on the basis of emotions, this will be obvious and you will be disadvantaged during the negotiation. Even if you have absolutely set your heart on a particular car, you do not want to make it too obvious.
  15. A salesperson will often tell you that he needs to consult with his manager to see if the price you offer is acceptable. So the manager becomes a villain and the salesperson appears on the buyer’s side.
  16. To convince you of the excellent business, the salesperson will claim that he loses money on the deal. This is another tactic aimed at appealing to the sympathy of the individual.
  17. The offer of “extras” such as car mats, roof racks and other items serves two purposes: it lets customers believe that the dollar amount is not negotiable. If the dealer has managed to convince you that negotiations are complete, the extras can add up to less than $ 500. It slows down the negotiations and diverts the focus from the dollar amount.
  18. Do not let yourself be passed on. If a salesperson feels that he is not in control of the sale, he will say that he is taking a coffee break and “passing you on to another salesman”. This could happen three or four times until you are “exhausted”.
  19. Note the possible loss of value of the desired model in the future. Many people are often obsessed with getting the lowest possible price and at the same time they do not even think about depreciation. After a few years, the favorable deal turns out to be no longer so cheap.
  20. The car, it’s equipment and all extras should be stated in the contract in as much detail as possible. Otherwise there is a chance that the car dealer might replace parts, that normally come with the car, against cheaper ones, before the actual handover of the car. That has happened specifically with expensive tires from Michelin, Continental or similar. This can increase his profit margin by a few hundred dollars. Because in the purchase contract not certain tires were mentioned.
Car insurance

The type of insurance you choose affects the total and running costs of your vehicle. Therefore, inform yourself about the different types of insurance and their providers before you go to the car dealer.

Graphic: Types of car insurance
Types of car insurance*

Compulsory third party insurance

Compulsory third party (CTP) is the most important type of the car-insurance. It covers death and personal injury if you are involved in an accident. Each state and territory has different rules regarding this type of coverage. Each transport authority of the respective federal state / territory has information about the CTP insurance. Some people think that their CTP insurance covers them for damage caused to someone else’s property while driving their vehicle, but that is not the case. The CTP insurance covers only the driver of a car for personal injury to third parties, not for property damage.

For that you need a

Third party property insurance

The “Third Party Property Insurance” covers the repair costs of property damage caused by your car. Some of these insurance policies include a “uninsured motorist extension” that covers you if your car is damaged in an accident and you are not at fault. Third Party Property Insurance may seem like an optional extra, but it makes perfect sense as it protects you from claims for damages in an accident where you blame.

There are three main types of insurance that you can take out of your car and that provide third party liability insurance:

  1. Comprehensive car insurance – covers damage to one’s own car and the property of others in an accident (including fire) and theft.
  2. Third party, fire and theft insurance – covers damage to other people’s property and provides limited coverage for damage to your own vehicle caused by theft or fire.
  3. Third party property damage insurance – covers damage to the property of other persons (e.g. car or house) and your own legal costs.

By law, you are only required to have CTP insurance.

In addition to CTP coverage, consider what additional coverage you need. Ask yourself: If I collide with an expensive SUV, can I afford the repair costs? Is my car maybe not ready to go? How can I get to work if my car was stolen or had total damage?

Car insurance policies are based on either “agreed” or “market value”. A policy based on an agreed value has a set dollar value for your vehicle. Market Value Guidelines rate your car based on make, model and condition. The agreed value is usually higher than the market value. Compare the costs and terms of the various car insurance policies, compare the difference between a high premium and low own contribution to the opposite.

* see ASIC’s Moneysmart – Car insurance

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