Australia Risks

Buying a car in Australia for foreigners

Buying a car in Australia for foreigners is easy enough. Nearly everywhere in Australia there are numerous car shops, dealers and parking lots, where you can buy a new or used car.

It is much simpler to search for a car via the Internet. The leading website in Australia concerning car sales is www.carsales.com.au, which is very popular and provides remarkably convenient interface and relevant information. Here you can find both new and used cars and place advertisement if you intend to buy or sell the car.

Purchase options include dealers, private owners, auctions or fleet car sales.

Advantages of buying a car in Australia

The main advantage of buying the car from the dealer is that he is obliged to provide some sort of warranty on the car. The warranty period depends on the age and price of the car. Although, sometimes there are exceptions – sales without warranty.

Buying from the dealer ensures to some extent that the car is not stolen. Dealers sell both used cars and new ones. Those, who sell only new cars, are very few, if any.

The procedure of purchasing the car usually looks this way. First of all, do some browsing job – search via the Internet, find out more about suitable places, models and prices. After selecting the car, just go to the office and sign the agreement. After that provide the dealer with a check of your bank. A day later you will have the car already registered. As a rule, the price, indicated on the car, already includes registration, stamp duty and the rest of similar expenses.

There are also another options. For example, the price of the car may mean that it is only the money that dealer gets. Apart from it you still need to pay registration fees and stamp duty. Registration is paid for entry into a register plus third party insurance. Depending on the cost of the car it can account for another thousand dollars.

Also, when buying a new car, you may think you are buying a car that you were shown, but it is only a demonstration car. Once you decide to buy a car, the dealer orders the same new model and you need to wait for it to arrive, sometimes for a whole month. This is a hardly acceptable alternative, especially if you have just arrived in Australia and need a car urgently. So it is always better to ask.

In Australia it is possible to negotiate the price of the car.

Fleet car sales mean that not only the state cars are sold, but the cars of any big companies that decided to update their fleet as well. But, basically, these cars were previously owned by state employees. Prices at this auction are lower than those of the dealer’s.

Benefits of fleet car sales are that you can buy a relatively new car – 2-3 years old, good, reliable model and about 20% cheaper than at the dealer’s. Often cars are so new, that even have the manufacturer’s warranty. The disadvantage is that fleet car sales are held as the auction. And if you have just arrived in Australia, buying at auction is a bit problematic. Everything happens very quickly, there are language peculiarities, so sometimes it is difficult to understand. You have to compete with dealers, who are very experienced in purchasing at the auctions. On the other hand, it’s always worth trying. If you failed to buy the car at the auction, it is always possible to go to the office afterwards and try to negotiate.

Since prices are generally low, the money for the purchase is required immediately. The price includes auctioneer’s margin. Registration is not included. You will have to pick up the car the same day.

In Australia Public Trustee QLD auction is the most popular one. They regularly publish information about the date of the next auction. It is not necessary to go straight to the auction, you can buy online, as there is a form, which is called Pre-auction bid. If the price fits them, they sell you the car. Their margin accounts for 11% (but no more than $220).

Apart from fleet car sales there are ordinary auctions. The main advantage is that the prices are very low. But there are drawbacks as well. Besides the already mentioned complexity of the auction, they are the next.

Cars are sold as “Sold as Seen”, which means you buy what you see. This is risky, because there is no guarantee that the car will ride.

You often need to pay a premium to the auctioneer. It’s better to find out in advance, how much it will cost.

Before the auction you need try driving. Buying at the auction is probably interesting for those who are at ease with the cars. Occasionally the car at auction is new and still under warranty. But the risk that the car will fail after the purchase is still significant.

As a rule, the price at the auction does not include the registration of the car. After purchasing the car, the buyer should receive roadworthy certificate. This accounts for another $150. If it was not provided, you will be given a list of problems that must be solved before the certificate will be issued. Certificates are provided by repair workshops. In general, it seems that this is not a very convenient option for newly arrived.

Another option is purchasing from private owners. They sell their cars at prices, much lower than the dealers charge.

However, you should remember about the risks. You can buy the stolen car. The warranty on the car may be missing. But, in general, a lot of people are buying and selling cars this way. So again – it’s worth trying.

Car loans

Most people are usually using car loans. The car dealer can provide you with it immediately. The loan is available only for those, who have a permanent job.

The terms of loans differ greatly, so you need to be very attentive about the overall cost of the car (i.e., the main amount plus interest payments). Apart from the cost of applying for the car loan, you will have to pay for insurance and settlement fee. The duration of the loan is usually five years.

Sometimes loans are paid out in small payments during five years, but in the end you need to pay a large sum to the bank (balloon payment). In this case, the person usually does not intend to return the loan, and, after a couple of years, just changes the car at the dealer’s, and the loan is refinanced. What is not paid is added to the new loan. Thus, the loan amount is increasing all the time.

There is also Novated Lease (buying car on pre-tax money). Sometimes it can be beneficial, but it is calculated in such a way, that until the end of the contract about half the cost of the car, or even more, remains unpaid (this amount is called the residual). If you manage to sell this car for money, equivalent to this residual, then everything is fine. But it often happens that you can fetch less money for the car than the payment under Novated lease. Then this difference is usually refinanced, as in the case of a loan with balloon payment, which leads to an increase in the amount of the new loan.

 

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