Owning a vehicle in Australia is a necessity due to the long distances between populated regions, especially if you don’t reside in urban areas.
If you’re an expat or a first-time buyer, there are several places where you can purchase a car: from a private seller, online sellers, and registered dealerships.
Buying Through Car Dealerships
Most Aussies go to a dealership for new or used cars. It is a popular choice and if you feel as though buying a car through a dealership is the best choice for you, just make sure to know all the facts first.
A car is a big investment that can impact your finances for years down the line. So before making any decisions, it pays to be aware of these key factors.
The popularity of dealerships as a source of new and used cars can be attributed to the following advantages:
You’ll get a warranty.
Any reputable dealership offers a warranty. All new cars come with a manufacturer’s warranty of up to 3 years or 100,000 kilometres. However, for used cars, dealership warranties vary from state to state: Cars that have less than 10 years and lower than 160,000 kilometres mileage are usually offered three months or 5,000 kilometres warranty, whichever comes first. Typically, there will be one to three day cooling off period, and canceling the purchase can be done in writing with corresponding charges.
You can bargain for the price.
Purchasing through a dealership will allow you to bargain for a more ideal price — especially if you can prove that you have the money or at least, have financing ready. Dealerships are keen to close a deal with serious buyers as quickly as possible. Once they read you as a serious buyer, you instantly have the upper hand at negotiation. And if you are truly skilled at bargaining, you might also get to take home some extras like paint protection or extended warranty.
You can choose the best dealership.
Unlike with private and online sellers whose information can be difficult to access, you can easily gather a lot of information about dealerships to help you decide. You can check out its website, read reviews from previous clients, and visit the dealership in person. One of the best practices when choosing a dealership is to visit the three dealerships nearest to you. This way, you’ll be able to compare prices and deals within your area, plus there is a good chance that some people you know have already been clients of these dealerships. You can get first-hand information about the way the dealerships deal and their integrity.
You can trade your old vehicle.
Another advantage of buying a car through a dealership is the possibility of trading your old vehicle. Provided that your current vehicle is in excellent condition, this process is relatively easy. Moreover, this makes disposing of your old car quicker compared with selling it off privately. Trading is also helpful if you don’t have enough cash on hand or you don’t have an approved financing. However, you must research the market value of your old car beforehand so you’ll know if you’re offered a fair deal.
You have many car options.
By going to the dealers, you can test drive as many cars as you want. This is very advantageous if you still haven’t decided on what car to purchase. Test drives will give you a first-hand experience, which will help you make a more informed decision later on.
Buying a car through dealerships present many advantages, it also comes with certain risks and downsides that you should be aware of.
Cars are priced higher.
A clear downside is that cars sold in dealerships are more expensive compared with cars sold privately or online. This is not unreasonable at all considering that dealerships need to spend more money on maintaining a physical showroom. To compensate for their expenses and to generate profit, dealerships naturally have to include a markup on new and used car prices.
The best way to make the most out of the high markups is to try and bargain as many FREE extras as you can. Before settling on a purchase, you can also compare the prices from multiple dealerships so you can choose the best deal.
Hard selling is very likely.
You might find a dealership an uncomfortable place if you hate pushy salespeople, or if you are easily swayed, you could end up spending more. A dealership’s primary goal is to sell their cars. Most likely, you’re going to encounter aggressive sales agents with different tactics to get to you. If you’re not too good at resisting a convincing sales pitch, you could go home with a deal that’s beyond your budget and or a car that you don’t like.
They will push dealership finance.
More often than not, a dealership will recommend the finance companies that it’s affiliated to. They do so not because these providers offer the best deals, but because the dealership will get a commission for closing a deal with them. It’s best that you have already explored your financing options prior to your visit to dealerships. Go online and check out other finance providers like Car Finance because you’ll likely find a better car finance deal.
Risks with used cars.
All dealers are required to comply with the Consumers Guarantees Act and Fair Trading Act and make sure that the vehicle is of good quality. However, as with any used car purchase, there can still be some risks involved. These include inaccurate or tampered odometer readings, misleading car information, unnecessary extras, and faulty or unsafe cars.
Tips for Dealership Negotiations
As with any negotiation, your best defense against a bad deal is going into battle armed with as much information as you can gather. And some insider tips won’t hurt your plan of attack either. Keep these best practices in mind before heading to any dealership:
Get the right timing.
Aside from marking up the car price, dealerships also get their profit from the bonuses that manufacturers give for hitting their targets. That’s why the best time to shop at the dealerships is during the last two weeks of the month and the last months of the year.
The key is buying when dealers are close to achieving their targets and won’t mind taking a break-even bargain, just as long as they will get the bigger month-end or year-end reward.
Buy the car first, then come back for extras.
Most dealers use add-ons and extras to get away with the higher purchase price for a vehicle. Don’t be overwhelmed by the idea of getting lots of extras and not minding the total price anymore. The best thing to do is sticking with the car purchase first. Bargain for it and settle the deal.
After some time, you can go back to the same dealership and shop for the accessories that you need.
Don’t show all your cards.
Even if you have a pre-approved loan ready or a good budget in your pocket, the dealers don’t need to know exactly what the figures are. It can be used in a sales tactic to persuade you. Make a low-ball when presenting your budget because the dealers will surely offer a higher deal. By doing so, you’ll end up with a deal that’s within your means or even lower.
Bargain as much as you can.
A car is a commodity that you can haggle for a good price. Remember that most prices attached to the cars are just starting prices. So always try to strike a bargain to the best of your ability. If it doesn’t work in one dealership then do it again with another. With luck, you’ll get the best deal for your dream car.
Walk away when you need to.
Again, talking to dealers can be overwhelming. You will be bombarded with lots of information, figures, numbers, and even sweet deals that could mean literally nothing. You might get persuaded at one point, even though you are aware that it’s not the right deal for you. Don’t hesitate to ask for some time to think. Relax, and remember that there are still other dealerships out there to check out and other cars to purchase. Take your time to see all available options before agreeing to a car deal.
It’s pretty much expected that dealerships will try to sell you with extras and add-ons that will pump-up the total price. Some of the dealer extras are worth considering and some simply deserve a hard ‘No’. So here is a list of add-ons that you should and should not get:
Say ‘Yes’ to the following:
- Floor Mats and Boot Mats – Dealerships sell the best ones and the exact fit for the car.
- Paint Protection Films and Bonnet Shields – Specialists from the dealership can apply the protection films better than most outside vendors. Also, bonnet shields that fit perfectly into a car are those that come from dealerships.
- Extra Window Tinting – This extra is usually offered cheaper at the dealership than with local stores. It’s best to research for prices prior to your trip to the dealership.
You can skip the following:
- Paint, leather, and fabric protection – Definitely a strong ‘No’ to these offers if you’re buying a new car. A car warranty already covers protection for the paint, leather, and fabric. Also, you can get these services at a cheaper price elsewhere.
- Extended Warranty – Most of the time, a manufacturer or dealer’s warranty is already enough for a vehicle. But if you really want to get an extension, you don’t necessarily have to purchase it right away. Our advice is after buying your car, go home and search for better deals.
- Rustproofing – Tempting but completely unnecessary. Don’t get enticed by this extra, unless you’ll drive your car in the water, you don’t need extra rust proofing because most cars already have enough of it.
- Towbars, roof racks, and car alarms – Third-party providers always have better deals for these.
Get a Pre-approved Loan with Car Finance
Apart from these insider tips, remember that the best tool in your arsenal is a pre-approved financing, so you’ll have more bargaining power.
Call us on 1300 889 669 or make an inquiry online and let us help you gain more confidence in your trip to the dealerships.