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New Year, New Car?

New year

Most of us will have returned to work by now, cursing the number of cars on the road while we sit in rush-hour traffic.

Is it just us, or have the roads gotten busier?

Chances are there are a few more vans, trucks and people-movers on the open road this month, with car-buying intentions increasing according to IBISWorld.

Research shows that the number of new cars being purchased each year has seen a largely steady ride over the past five years. In 2014, more than 1.1 million vehicles changed hands, with the majority of Australians taking out car loans to cover the cost.

In fact, the amount new car owners are borrowing to finance their purchase has also been growing. This means you are not alone if you’re looking to upgrade this year – perhaps a $100,000 Maserati is on the cards?

“Over the past five years, the number of new lending commitments has doubled as consumers have looked to buy newer cars that require less maintenance,” IBISWorld industry Analyst Andrei Ivanov explained.

“This is also great news for the second-hand car buyer, who is able to find a broad range of affordable and quality used cars on the cheap.”

Whether you’re in the market for a sleek new Jaguar or a sixth-hand Mazda, here are three things to consider before applying for a loan:

Know who you’re dealing with

Before walking onto a car yard with your envelope of cash, it pays to know who you are talking to and what their role in the transaction is. Are you buying from a private seller? Remember to read through the documents and perform a thorough check to ensure you’re not driving away in a lemon with a shady past.

Purchasing through a dealership? Keep in mind that these professionals are often hoping to make the most sales at the highest price. Don’t let them influence your decisions and toy with your emotions. Stay strong and remember you have the power to walk away, so you also have the power to haggle.

Budget for breakdowns

No matter how affordable that rare, classic import is, you may want to hesitate before buying. Consider how much repairs and replacement parts could cost. When in doubt, buying local is best, as the parts you need are right around the corner.

Additionally, even when you can perform the repairs and maintenance yourself, car insurance is an important factor. This will ensure you can get back on the road without breaking the bank if involved in an accident.

Toy car and calculator

Invest in your future

While the tiny, two-door convertible looks good in your driveway now, it pays to think about your future. Are you and your spouse starting a family? Do you plan to adopt several large dogs? Stop and take some time to consider your future needs to make the new car a worthwhile investment, rather than a temporary toy.

What’s your dream new car? Is 2017 the year when you finally make the purchase?

This blog post is for general information purposes only and is not intended as financial or professional advice. It has not been prepared with reference to the financial circumstances of any particular person or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice before making any decision about any action in relation to the material in this article.

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