Should I buy a new car?

“Should I buy this new car?”

I love this question.

ovrophu8vsw-oliur-rahmanPeople just loooooooove shiny new cars! But are they a good investment? Almost always, absolutely bloody not! But, in Australia unless your entire life revolves around the inner city and you’ve got great public transport links around you (or you love a good bike ride, everywhere, all the time) then you need a car. But how much should you spend, when should you buy a new car, from where?

First of all, let’s get one thing straight. Buying a car brand new should be almost completely out of the question.

If you’re going to buy a brand new car, you may as well buy a second hand car and throw dollar bills out the window while cruising down the freeway, because that’s pretty much what you’re doing if you buy a brand new car from the sales floor.

Agreed? Agreed.

Should I buy the new, second-hand car?

Maybe. Let’s consider a few things first…

1. Where are you buying it from?

Buying a car from a dealership is ALWAYS going to be more expensive than a private seller. Have you looked in other places like used car dealerships or private selling platforms like gumtree, craigslist, community newspapers, your local IGA pin up board?! Without a doubt, those are the best places to start.

I’m not saying you should follow my footsteps but I bought a used Holden from Gumtree for $3,000 12 months ago and have not had a single problem with it. It was advertised for $6,500 but the major difference is, he was a private seller. Is a dealer going to lose sleep if they don’t sell one of their many RAV4 Toyota’s this month? No. Is John Smith going to be worried that he can’t sell his family car? More than likely! Most of the time, private sellers have already bought a new car and need the money quickly so you can get them to drop the price a lot.

Buying through a dealer or private website, you’re handing over a lot of money purely for the dealerships services (plus a bucket load of interest if you take out finance). And sure, a dealership might feel like a more trustworthy and safe options – but if you can get a full ownership and service history your generally very safe there. Even better, call your insurance company or similar for an independent valuation and appraisal to ensure you’re getting a good deal and all is working well.

2. What about a Salary Sacrifice?

I never advise getting finance or a novated lease on a car. My view is that a salary sacrifice is just a fancy way for dealerships to convince you that you’re receiving cheaper finance. It’s true that you’re saving tax but you’re still paying through the nose for the car.

When you take out a mortgage on a house, you’re 99% sure that the asset you’re purchasing is going to grow in value. With a car, unless you’re going to spend a fortune doing it up and let it age for 80 years, why would you take out finance and pay thousands in interest on a depreciating asset? If you’re looking at purchasing a car, the best way to do it is buy one that has already dropped it’s value and is a few years older but still in perfect condition.



A new car drops 70% of its value in the first 4 years!

3. Do you NEED a new car or do you WANT a new car?

If your current car is getting you from A to B then what is the real reason for the purchase? Depending on your income and the cost of a new car, paying it off could significantly impact upon your annual savings, or throw you into debt. Is it really going to be worth throwing yourself into debt to have the shiny new car?

4. Have you done the calculations?

If you’re getting a loan or finance, have you considered how much you’ll actually pay for the car in just the first 5 years, then compared that to how much it will be worth after those first 5 years? I recommend you do THOSE calculations, then take into account how much less you will save after your living expenses and your loan payments, and compare that to how much you’d save over 5 years without the car.

If the maths isn’t working for you, that’s a pretty good sign not to buy the new car.


Obviously it’s your money so it’s entirely your decision. All I’m saying is that as a money coach, this is how I would approach it personally. For me, there is only one way to buy a car without being hit with extra costs and that is to buy a car at least 3 years old with your savings.

I hate seeing people put themselves further into bad debt when the main goal is to pay off the home loan, so in answer to the above question – NO, don’t buy the new car! Do your research, do the legwork, find the right one at the right price from a private seller – you will save THOUSANDS!

Crown Money Management Coach


ps. Reading this article help you out at all? Let me know if you want to have a chat! Contact us here and ask for Nick. 

*Comparison rates are calculated on the basis of secured credit of $150,000 over a 25 year term. Please note this comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.