Buying a car is one of the biggest purchases most people make, and the industry is not designed to help you make a good decision. It’s designed to maximise the dealer’s profit.

Here’s how to approach it with your eyes open.

New vs Used: The Real Maths

A new car loses 15-20% of its value the moment you drive it off the lot. After three years, it’s worth roughly 50-60% of what you paid.

A three-year-old car has already absorbed that depreciation. You get essentially the same car for significantly less money. Most modern cars with proper servicing last well beyond 200,000 kilometres.

The main advantages of new: warranty coverage, latest safety features, choice of specifications, and certainty about history.

The main advantages of used: dramatically lower price, lower insurance costs, and lower registration costs (in most states, registration costs are based on value).

For most first-time buyers on a budget, a two to five-year-old car from a reputable brand offers the best value.

How Much to Spend

The general rule: don’t spend more than 30% of your annual gross income on a car (including finance costs). If you earn $60,000, keep the total below $18,000.

For a first car, spending $10,000-$20,000 gets you a reliable, well-maintained used car. Spending $25,000-$35,000 gets you a near-new or demo model.

Remember: the purchase price is just the beginning. Insurance, registration, fuel, maintenance, and potential finance costs all add to the total cost of ownership.

Reliable Brands (the Honest List)

These brands consistently rank highest for reliability and lowest for maintenance costs in Australian conditions:

Toyota. Boring to say. Also true. The Corolla, RAV4, and Camry are reliable, affordable to service, and hold value well.

Mazda. Slightly more engaging to drive than Toyota with comparable reliability. The Mazda 3 and CX-5 are excellent choices.

Hyundai and Kia. Massive improvement in quality over the past decade. Good value, long warranties on new models, and competitive pricing.

Honda. The Civic and HR-V are solid, reliable choices. Parts can be slightly more expensive than Toyota or Mazda.

Brands to approach with more caution for budget buyers: European brands (BMW, Mercedes, Audi, Volkswagen) have higher maintenance costs and parts prices. They’re fine cars, but budget for higher ongoing costs.

The Used Car Inspection

Before buying any used car:

Get a pre-purchase inspection. A mobile mechanic will inspect the car for $200-$350. This is non-negotiable. The inspection cost is trivial compared to discovering a hidden problem after purchase.

Check the PPSR. The Personal Property Securities Register ($2 per check) tells you if the car has money owing on it, has been reported stolen, or has been written off by an insurer. If there’s money owing, you could lose the car even after buying it.

Service history. A complete service history with a reputable mechanic or dealer indicates the car has been maintained properly. Missing service records are a red flag.

Test drive properly. Don’t just drive around the block. Take it on a highway (for high-speed issues), through suburban streets (for low-speed handling), and over bumps (for suspension problems). Test all electronics, air conditioning, and windows.

Dealer vs Private Sale

Dealers offer statutory warranties on used cars (varies by state, typically three months). They’re more likely to have serviced the car before sale. Prices are higher.

Private sales are cheaper but offer no warranty or consumer protection. What you see is what you get. The pre-purchase inspection is even more important for private sales.

Finance: Cash Is King

If you can pay cash, do. Car finance costs you thousands in interest over the loan term.

If you must finance:

• Compare rates across banks, credit unions, and the dealer
• Dealer finance is almost always more expensive than getting your own loan
• Fixed interest rates give certainty about repayments
• Keep the loan term as short as you can afford — five years maximum
• Check the total cost of the loan (principal + interest), not just the monthly payment

Insurance

Comprehensive insurance covers damage to your car and other people’s property. Essential if your car is financed or worth more than you could afford to replace.

Third-party property damage covers damage you cause to other people’s property but not your own car. Cheaper, and suitable for low-value cars you could afford to lose.

CTP (Compulsory Third Party) is included in your registration and covers injury to people. This isn’t optional.

Compare insurance across multiple providers. The same car can be quoted at dramatically different prices by different insurers.

The Negotiation

Car prices are negotiable, both at dealers and in private sales.

Research the market value using RedBook, CarsGuide, and Autotrader before negotiating. Know what comparable cars have sold for recently.

Don’t negotiate monthly payments — negotiate the total price. Dealers can make any monthly payment look affordable by extending the loan term.

Walk away if the price isn’t right. There are always more cars. The pressure to buy today is a sales tactic, not reality.

Buy the car that fits your needs and budget, not the one that appeals to your ego. A reliable, boring car that gets you where you need to go is worth more than a flashy car that costs a fortune to maintain.