Buying a new car

New car salesman and customer
  • Set your budget and arrange your finance before you go car shopping
  • Make a shortlist of the features you need and want
  • Keep your cards close to your chest and be prepared to walk away
  • Refer to our how do car warranties work guide to avoid being baffled by car-dealer jargon
  • Don’t get sucked into spending on extras you don’t need
  • Read the vehicle purchase document carefully before you sign it

A new car brings benefits that range from a factory warranty to the expectation of years of trouble-free motoring. 

There are a multitude of steps in the process of budgeting, financing, negotiating and taking delivery of your new car – punctuated by potential pitfalls along the way – and then there’s the bewildering choice of models from which to choose. 

So, before you go test-driving or prepare to play hard-ball with a dealer, you need to work out your new-car budget.

How to set your new car budget

There is much more to the cost of a car than the purchase price alone. So you can set your budget in readiness to go car shopping, you need to work out what else you’re going to have to pay when you drive away – and over the course of owning the car.

On-road costs such as registration and stamp duty are included in the drive-away price you will be asking dealers to provide, but other running costs include car servicing and repairs, insurance, tyres and fuel may not be.

The advent of fixed-price servicing for many models has made it easy to establish how much it’s going to cost to service your car each year, though it pays to be aware of which service items are included, and the wear and tear items that aren’t.

It’s equally easy – and highly advised – to go online and get a few comprehensive insurance quotes for the models you’re considering.

You can find prices for replacement tyres online too, and, in fact, buying tyres online is a good way to save money on them. As a rule, the larger the diameter and the wider the tyre, the more costly it will be to replace. Make sure you buy tyres from a reputable retailer and be aware that the cheapest tyres are not always the best. Remember, your tyres are what keep you connected to the road. They’re not an item to scrimp on.

The government green vehicle guide is a source of fuel consumption (and emissions) figures which, with fuel price per litre and your average annual kilometres, will help you work out a ballpark yearly fuel cost.

Choosing the right car

Once you know how much you can spend you’re in a position to narrow the search to a shortlist of suitable cars. In addition to emotional factors such as brand, image and appearance, some of the factors to consider when selecting the right make and model are:

  • Whether the model is practical and has the features you need. The NRMA’s extensive catalogue of car reviews is a good place to start; a test drive will help you decide if the car is right for you.
  • The safety rating – visit the ANCAP safety ratings website. It is good to know what safety features are standard on your car and if it has the latest technology (such as autonomous emergency braking) or if this comes as part of an optional package.
  • Running costs – luxury vehicles and some imported models can be expensive to service and repair. Look into the manufacturer’s fixed-price service scheme, or do your own research
  • The cost of insurance – Equivalent models usually cost a similar amount to insure, but this isn’t always the case
  • How many passengers will you regularly carry? Will your kids require more leg room in the near future?
  • How is access in and out of the vehicle with babies, young children, or the elderly? If you're going to be carrying babies or children then learn more about child restraints and how the NRMA can help you in your decision.
  • Will you need power to tow a trailer, boat or caravan? What's the vehicle's towing capacity?
  • Do you require space for work materials, sporting gear or a pram? Do the rear seats fold down? Or is there only a ski port? Do the rear seats fold down to a flat floor?

How to negotiate a lower price on a new car

It’s often possible to negotiate a lower price than the dealer is asking. Here is our approach:

  • Never let on how keen you are to buy; always act like you’re prepared to walk away and buy another car
  • Shop around – get at least three quotes
  • Always ask for an 'on the road' price, or a 'changeover price' if you're trading in your present car. This will include all the options you've selected and the statutory and dealer charges, and removes the risk of getting caught out by a 'hidden cost'
  • Dealers usually offer more attractive prices for cars in stock. If you fall in love with a particular model or colour with specific options, you may have to wait while the dealer orders it and risk a price rise in the interim
  • One way to blow your budget with a new car is to buy all the optional extras the dealer offers. Avoid buying unnecessary extras such as rust-proofing or paint protection

How to decipher car dealer jargon

On-road costs On-road costs include vehicle preparation, registration, compulsory third-party insurance and stamp duty. 
Manufacturer’s List Price or MLP The basic price of the car, excluding on-road costs.
Drive-away price The drive-away price is the only price you should be interested in – it is the MLP plus all on-road costs.
Changeover price The difference between the trade-in price that will be paid on your present vehicle and the drive-away price for your new car.
Build date The month and year the vehicle was built. It’s stamped on the build plate, which is usually in a rear corner of the engine compartment. This, rather than the compliance date or model year, is used to establish the age of the car for the purposes of a used-car valuation.
Compliance date The month and year that the vehicle was certified as complying with Australian Design Rules – usually a few months after the build date. 
Model year Manufacturers increasingly assign a model year to a certain specification – for example, an MY17 (model year 2017) car might have different features to an MY16. However, an MY17 model can be built in 2016 so is still considered a 2016 model which will affect your resale value
Manufacturer’s warranty
Manufacturer's  warranty

The factory warranty (anywhere from three to seven years, depending on the brand) and a fixed or unlimited number of kilometres. This is the car’s official warranty and does not come with any obligation to return to a dealership for servicing. However, it must be noted that if you don’t get your car serviced at a dealership and they don’t use genuine parts then you may not be covered if that part fails.

Dealer warranty A dealer warranty might specify that you must return to the dealership for servicing to maintain cover and, rather than providing useful extra protection, it can be a means of tying you to more expensive servicing.
Extended warranty An extended warranty can be a plus, but check whether it’s a factory warranty or a dealer warranty. The former is great; the latter might not be worthwhile for the reason described above.

Don’t fall for new car extras you don’t need

It’s about the time most buyers are basking in the glow of successfully negotiating a great deal on their new car that they’re most vulnerable. This is often the point at which a friendly and well-dressed woman emerges to congratulate you on your purchase, and invite you to sit down to discuss protecting your investment. 

Rustproofing, fabric protection for the upholstery, headlight and bonnet protectors and an extended warranty are favourites, because they cost the dealer very little but can be worth thousands in clear profit – often more than the dealer makes on the car itself.


Rustproofing has already been done at the factory, by sophisticated electrochemical processes, before the car is painted. After all, rust attacks metal, not paint. How could any aftermarket rustproofing treatment be effective if it's applied over the top of a finished car? Rustproofing is a textbook waste of money.

Fabric protection

Fabric protection can be effective, but is it worth hundreds of dollars? You can buy a can of similar stuff for 10 dollars at the supermarket or furniture shop and do it yourself.

Headlight and bonnet protectors

Unless you regularly follow other drivers too closely on dirt roads, all you'll gain from fitting these is reduced headlight efficiency because they’re difficult to clean properly.

Extended warranties

Some extended warranties are not worth the paper they are written on. The list of parts they don't cover can be longer than those they do. They're basically a means of ensuring that you bring your car back to the dealer for servicing.

How to sort new-car gimmicks from genuinely useful features

Back seat DVD screens  ✓ If you have young kids, tick this option and prepare to enjoy future road-trips in a state of peaceful relaxation. Rear DVD players can be pricey so look into aftermarket versions that, while not as neatly integrated into the interior, work just as well. 
Premium infotainment systems  ✓ Even low-priced cars today feature Bluetooth phone connectivity and various inputs for audio integration. While spending up on a high-powered audio system might be an indulgence, features such as voice control, satellite navigation and reversing cameras are often worth the money, and will add appeal (and value) at resale time, too.
Safety features  ✓ There is no such thing as too many airbags, though you can have too few – aim to have at least six. Electronic stability control is standard in all new passenger cars sold in Australia – it’s a potentially life-saving technology.
Sports suspension, and larger wheels and tyres  ✗ These can make a car steer, handle and look better, but can also have a negative impact on ride comfort. Test-drive the standard and sports-optioned versions of your car before you tick this box.

Paying a deposit

After you have done the deal the salesperson will ask you to sign a legally binding purchase document. If you sign and subsequently change your mind, you may lose your deposit.

Before you sign on the dotted line, here are our tips:

  • Make sure you read and fully understand the vehicle order form before you sign it
  • Insist that all costs, including stamp duty, registration fees and any insurance and optional extras are clearly itemised
  • Don’t sign a blank order form or one with any blank spaces
  • Don’t sign an order with more than one dealer
  • Ensure that the contract states that your deposit will be refunded in full if the vehicle is not delivered by a specific date
  • The order usually states the price is 'on delivery'. If your car has to be ordered from the factory, any price increase before delivery will be passed on to you
  • If you are buying using finance, and don't want the dealer to arrange it for you, ensure the following clause is in the sales contract

'This agreement is subject to the purchaser obtaining finance on terms satisfactory to the purchaser to complete the sale. If the purchaser is unable to arrange finance which is satisfactory to complete the sale, the purchaser may rescind the contract, and the deposit paid shall be refunded in full to the purchaser.'
If you sign a contract without this clause, you may have to accept the dealer's finance at a much higher interest rate.

If you get into a dispute with a dealer and can't solve it, contact the NSW Department of Fair Trading on 13 32 20.

Taking delivery

  • Before you sign for delivery, make sure you inspect your new car thoroughly
  • Make sure the vehicle's 'build date' shows the year and month of manufacture stated in the paperwork
  • Check for paint, trim or glass defects
  • Check that all the accessories are working properly
  • Check the spare wheel, jack and tool kit are in place
  • Take the car on a test drive with the sales representative to ensure all is well mechanically. Make a note of any faults to be fixed without charge during the first service. Ask the sales representative to acknowledge them by signing the note
  • Try to take delivery and make all checks during daylight hours and in fine weather

Know the price of the vehicle you want?

NRMA's car loans calculator will help you estimate your car loan repayments over the life of your loan