How to get the best deal when buying a new car

This was published 7 months ago


How to get the best deal when buying a new car

If you were making a list of areas where Australians punch above our weight, you would include our swimming world records, our swag of Oscars and inventions such as Wi-Fi.

We’re also pretty good at buying cars. In the past seven years, we have bought eight million new cars. And that’s for a nation of just 25 million people.

New car discounting happens in June as dealerships strive to hit their sales targets.

New car discounting happens in June as dealerships strive to hit their sales targets.Credit:Nic Walker

New car sales are down on previous years in the wake of the coronavirus pandemic. They dropped about 60 per cent in April and the industry is only now beginning to recover thanks to end-of-financial-year sales (EOFY) and a $150,000 instant asset tax write-off for businesses, a COVID-19 stimulus measure that was due to end on June 30 but was extended until December.

I bought a used car last week and my brother’s been looking for one, too.


So, I have had a renewed glimpse into the alternative universe of the car yard, and I have spoken to some experts and come away with a few useful observations.

Cars are cheap right now

Discounting always happens in June and sales peak for the year as dealerships strive to hit their EOFY sales targets and businesses buy assets to reduce their tax bills.

There are signs that cars will be cheaper this month, too.

A $38,000 Hyundai is going for about $34,000 and car broker John Cadogan, from Auto Expert, says: “Because car sales are so apocalyptic globally at the moment, importers in all markets are slashing their margins and probably even paying dealers to sell at prices like that … when supply is high relative to demand it’s better to sell a car at cost or even a slight loss than it is to have them piling up on the docks unsold.”

As for price, he says take a look at the recommended, undiscounted, drive-away price on the carmaker’s website and then offer about 10 per cent to 15 per cent less than that to begin with – except during peak sale periods when that discount is likely already being applied.

Be wary of upselling

Even if you negotiate a bottom-dollar price for a car, which is a low-margin product, the dealer can make good money out of you through upselling.

So that means saying no to heavily marked-up extended warranties, window tinting, “ceramic surface coating” paint protection (tested on planes and used by Boeing!), and $800 a year pre-paid minor damage repair plans that you get offered at the point of sale.


Shop for finance, insurance

You should never accept the first quote on insurance, but this is especially true at a car dealership. I have heard people say they saved 40 per cent on the dealer’s insurance by getting another quote.

Dealer insurance often has a “lazy tax” added onto it, which is returned to the car seller as commission. They might also offer to add the insurance to the finance, so they get paid twice.

I have to give credit where it is due though: the first quote I got from the dealership was expensive, but the second one was the cheapest I found out of four quotes, so I took it.

It is the same with car finance. Some carmakers will offer finance at a comparison rate that is less than a mortgage interest rate, which is hard to beat.

However, third-party finance quotes you get from a dealership can be heavily marked up, so never take the first offer. Do your research before you visit the dealership.

Auto Experts’ Cadogan says dealers will ask you about trade-ins and finance early on in the sales negotiation process, so they know how many different opportunities they have to make money out of you.

“Most people make three transactions at the dealership and they only think about one,” he says.

“Tell them you don’t have a trade in and don’t want finance – don’t do any of that until you have already negotiated the price on a car.”

Joel Gibson is the author of KILL BILLS! The 9 Insider Tricks you Need to Win the War on Household Bills. Catch his segments on TODAY each Wednesday and on Twitter @joelgibson.

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