With the cost of living continually becoming harder to manage, and COVID continuing to disrupt the economy and much of our livelihoods, it's never been as difficult as it is now to plan for the future.
But sometimes you need to think ahead, especially when life's big moments need foresight, be it the birth of a new child, your first mortgage or even buying a car. There's no denying that saving up for a deposit can be a burden on your life. No one wants to be overawed by financial pressure, so we’re here to offer you some tips to help you save on your next vehicle.
Set Aside a Budget – One that earns you money
Even before you’ve purchased your next vehicle, you are likely to have an idea as to which cars you are interested in. After all, you've probably spent hours looking through PriceMyCar's comprehensive database to get an understanding of retail prices.
Once you go out and inspect vehicles, start to set aside repayment quotas from your weekly budget or monthly earnings that will be going directly towards the car. This is effectively a test run of managing your future obligations.
While you won’t know what your financing arrangements are or which specific car you may eventually purchase, pre-planning as if you were already paying off your car will give you a better feel for how much you can afford to set aside as regular repayments.
You don’t want to enter a loan to only then find the repayments are too much for you to manage. Give yourself enough lead time and make the plan fair enough to fit with your lifestyle needs. If you’re not already driving a vehicle, make sure you leave enough room in your budget for other expenses like insurance, registration, fuel and repairs.
Look to the second-hand market to sell
Not only can you save money by looking for the same vehicle as an ex-demonstrator model, but you also have the opportunity to maximise the sale value for your existing car by selling in the second-hand market.
Over the last year, with COVID bolstering demand for cars over public transport, the second-hand market has seen prices soar. Across the board, prices are up in the vicinity of 30%, and for some models, the gains have been even greater such that they are close to retail prices for a new car. That comes on the back of limited supply in the new car market.
The upside here is if you want to sell your car via the private route. Expect strong interest if your car is in good condition, it has certainly morphed into a seller's market. Of course, steer away if you are looking to buy, unless you absolutely cannot wait for stock to be delivered in the new car market.
Keep an eye on what you'll pay
Interest rates might be at rock-bottom levels on the back of the RBA's efforts to stimulate economic growth, but that doesn't mean a free lunch in the lending market. If you spot 0% finance deals, be particularly wary as you are probably paying more for the retail price of the vehicle.
Meanwhile, certain manufacturers like Honda, and starting next year, Mercedes-Benz, are rolling out fixed-price models. This means your negotiating power is set to be eroded as dealerships effectively turn into showrooms. You don't want to commit to a brand or model only to realise that by the time you pull the trigger, you've lost all control over your budget.
That means, remain flexible when it comes to what you specifically need in your next car, and be prepared to shift your brand allegiance if you can find the best deal that works for you. If in doubt, know we're here to help.
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