First Car Buying Guide

Buying your first car? This first car buying guide will help you get a good first car.

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Ben Gribbin

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Buying your first car can seem intimidating. Which make and model should you get? Should you buy your first car from a new car dealer or used? Our first car buying guide, which includes a first car buying checklist, will help you pick a good first car.

How to pick your first car

How do you pick your first car? Many first car buyers find the following qualities helpful in a car.

Price

Most first car buyers will be primarily concerned with the cost of the car. It's important to work out exactly how much you can afford, whether you're buying a car outright or using finance. Make sure you do some calculations to know exactly how much you can afford each month. This will help you narrow down your search for a good first car. Plus, a cheaper, widely available model should cost less to insure!

Compact size

For your first car, it's always a good idea to get a sensibly sized vehicle. A small first car will help you get to grips with driving and will help you when parking in cramped car parks or travelling around busy city streets. A smaller model is generally less stressful to drive, with tighter turning circles and shorter bodies, meaning they are popular with first car buyers. Plus, there are some advantages with insurance, see below.

Engine size

For your first car, it's wise to pick a model with a smaller engine (typically less than 1.6-litre capacity). Why? They use less fuel for a start, which will save you money. Secondly, with less power underfoot, it's easier to learn the ropes of real-world driving without getting in over your head. Finally, smaller engines with lower power outputs can save you money on your insurance, particularly when you're a new motorist with no driver history. It's a win-win!

Running costs

It's all well and good buying a banger, especially if it's for very little money. However, repair bills and fuel costs will add up quickly, turning that bargain into more of a burden. Remember to factor in the fuel economy of your chosen first car. The further you can travel per litre of fuel, the cheaper the car is to run.

Thefts

It seems odd to pick a car going by how frequently (or infrequently) it is stolen, but this can help lower your insurance premiums. You can find the theft risk rating by searching the National Motor Vehicle Theft Reduction Council's database.

Other features

Once you've factored in all the above, then you can think about the equipment and specs you want. Perhaps you really like bright red paint, or you absolutely can't do without Apple CarPlay (or Android Auto)? It helps to draw up a list of must-haves and things you'd specifically like in your first car. However, for your first car in particular, you'll need to be a little flexible on specs.

What's a good first car?

There are dozens of different options when you're buying your first car. We've compared different models to help you pick a good first car.

New

If you're lucky enough to be considering a brand new first car, these are all solid picks.

Make and modelEngine sizeDriveaway priceEconomyBoot sizeTheftsCommentsFinder rating
Fiat 5001.2L petrol$31,0964.9L/100km185LLow theft rating: 5The Fiat 500 is the most fun small car we've ever driven. Plus it has a dinky turning circle making it very easy to drive.72%
Toyota Yaris1.5L petrol$28,319From 3.3L/100km (hybrid)270LLow theft rating: 4The Toyota Yaris is another compact, easy to drive car. Plus it's available as a hybrid.84%
Mazda 21.5L petrol$26,4715.4L/100km250LLow theft rating: 4.5Another highly reviewed small car that would make an ideal first car thanks to its compact size.82.5%
Mitsubishi Mirage1.2L petrol$17,4904.7L/100km235LLow theft rating: 4A 9.2m turning circle is mental! Plus, the price for a new car is hard to argue with.62.75%
Kia Picanto1.25L (or 1.0)$18,8905.0L/100km255LLow theft rating: 4Another well priced new car, with decent specs, a tight turning circle and a funky style.76.75%

Used

Most of us can't afford a brand new first car. That's fine, there are plenty of good first cars on the second-hand car market for less expensive prices.

Make and modelEngine sizePriceEconomyBoot sizeTheftsCommentsFinder rating
Skoda Fabia1.2L petrol$7,995–$37,500+4.5–6.2L/100km (depends on model)300LLow theft rating: 4.5One of the best driving smaller cars. Underneath, it rolls on a Volkswagen platform also used by the Audi A1 and VW Polo.77%
VW Up! 2012-20141.0L petrol$6,500–11,5004.9L/100km251LLow theft rating: 5At just 3.54m long, the Up! is a tiny car perfectly suited to a new driver.80%
Peugeot 2081.2L or 1.6 petrol$5,500–$19,5004.7L–6.7L311LLow theft rating: 4.5A big boot, for this size of car and sophisticated Euro styling make the 208 an appealing first car.76%
Nissan Micra1.2L or 1.5L petrol$5,200–$14,9905.9L–6.6L251LLow theft rating: 4You really can't go wrong with the lightweight Micra, which while not a fast car, is well reviewed by owners.71.66%
Suzuki Swift1.2, 1.4 or 1.6L petrol$4,000–$32,9954.6L–6.5L242LLow theft rating: 4.5The Suzuki Swift is one of the most fun small cars we've driven. It's essentially like a Japanese Mini.76%

*Note, you need to do your research and due diligence to make sure the car you're buying is right for you. Buying a used car carries a level of risk with it. If you have little car knowledge, it is wise to take along a mechanic or have the car inspected, prior to purchase. Prices are correct as of 25 July 2021.

Should I buy a brand new or second-hand first car?

The TL;DR is, it comes down to money. But what are the pros and cons of buying a new first car, or getting a used first car?

Why you should buy a new first car

Pros

You're getting a brand new car. Nothing beats the new car smell and knowing that nobody has owned it before you. You're also buying a new car that features the latest fuel economy and efficiency improvements. Plus, you get the full factory warranty and roadside assistance, giving you some peace of mind. For example, you can buy the Mitsubishi Mirage with a 10-year warranty and capped-price servicing program. If you're an older driver buying your first car and you have a bit more money to spend, a new car could be the way to go for you.

You can pick the exact first car you want. When you're buying new, you're typically placing an order with the factory (unless you're getting a car that's on the forecourt). That means you get to pick the paint colour, trim, equipment levels and options you want. You can also choose whether you want a manual or auto (depending on the car model). The used car market is limited by what's available at that time.

You'll have all the latest mod cons. Modern entry-level cars have generally excellent standards of equipment and technology. Many models now have smartphone connectivity (which is a must for most first car buyers), as well as things like steering-wheel-mounted controls, keyless entry, large infotainment screens, rear-view cameras and safety technology like:

  • Forward collision-avoidance systems and autonomous emergency braking – using sensors, these systems help to avoid crashes which the driver fails to react to.
  • Hill start assist (HSA) – HSA can be useful if you sometimes panic and stall your car by letting the clutch out too quickly, which is quite common for new drivers.
  • Rear-view camera – These are genuine lifesavers and help considerably when reversing and parking.
  • USB ports – You'll want one USB port at a minimum, though you can buy adapters that use the 12V accessory power outlet. USB means you can top up your phone's battery and power things like dash cams. Some cars have USB plugs that also connect to the infotainment system for media sharing.
  • A/C – Not a modern development, but it is almost essential for the hot Australian climate.
  • Tyre pressure monitoring system – You can't always tell visually if your car tyres have lost pressure (especially as a new driver), so having a system that alerts you when they need inflating is extremely helpful.
  • Speed limiter – Another useful feature for first car buyers, which should stop you from collecting demerits on your new licence.

Post-sales aftercare. If you buy from a car dealer, it's nice to know you have a point of contact to go back to should you have any issues.

Cons

Depreciation. As soon as you drive your new car, its value drops. This is called deprecation. It varies depending on the model, but the biggest drops typically happen during the first 2 years. Financially, it often makes more sense to buy a nearly new car, letting someone else pick up the tab for depreciation.

Worry. You might think that buying a new car means you have fewer worries. But if you have a factory fresh car, you can find yourself worrying about where you park so that the car doesn't get scratched or have a bingle with a supermarket trolley.

Lemon. Just because you're buying new doesn't mean you can't buy a lemon. Quality control has advanced massively over the last 20–30 years, but even so, you can still find lemon cars that slipped through the net. A relative of mine bought his first vehicle brand new and in the first year he owned it, the car spent at least 1 day at the dealer's garage for warranty repairs – per month! It was a massive hassle. You can avoid this by researching car reviews from verified vehicle owners and checking if the car has any outstanding recalls.

Why you should buy a used first car

Pros

Save money. Almost all cars depreciate, and the biggest loss in value occurs over the first few years. That means you can swoop in and save thousands of dollars. It's also possible to grab a real bargain if the previous owner purchased several options and accessories from the dealer. Used cars tend to be more affordable than new vehicles. Then you can put the money saved towards insurance, or something else altogether. Also, when buying privately, you might have more wiggle room for bargaining.

Affordable loans. When you're buying your first car with finance, the less you spend, the lower the loan amount and the lower the monthly repayments.

Less worry about damage. If you've got a used car, especially one that's dented and scratched, you don't have to worry as much about keeping it pristine. The chances are, as a new driver, you might bump your car. So, if you're not driving a mint brand new car, you don't have the same level of pressure to keep it that way.

Factory warranty. While buying a new car will give you the full factory warranty – with some factory warranties now lasting 7 or more years – you could still buy a used car and have some of the remaining warranty period transferred to you.

Years since launch. This seems like an odd benefit, but when a car model isn't brand new, owners and mechanics have had years to work out all the little quirks and issues with a car. Plus, forum members often produce guides on how to fix common issues, often for as little money as possible.

Cons

Choice. You're restricted in which first car you choose by the selection of vehicles that are currently on sale. You might have to be a little more flexible on the spec, model and colour you're willing to buy.

Lemon. Even though you could buy a new car that's a lemon (a car that proves unreliable and has numerous faults), the chances are somewhat remote. But with a used/second-hand car, the previous owner might have:

  • Neglected to maintain the car, by not servicing or keeping up to the maintenance schedule
  • Badly repaired the vehicle after a smash or failure, either by scrimping and fitting poor-quality components, or carrying out the work themselves, without the proper knowledge to do so
  • Regularly driven it through salty water, accelerating corrosion and rust which weakens the structure of the vehicle eventually
  • Driven the car hard. Engines don't like to work too hard. A build-up of excess heat can increase component wear and mean the car is close to conking out. Driving a car too quickly also causes premature failures on things like the clutch and suspension

They could also be attempting to hide the true condition of the car, or they may be completely oblivious to any major problems it has, just lying beneath the surface of the body. So you need to know a bit about cars to avoid buying one that's unreliable. If you don't know anything about cars, take a look over our first car buying checklist below, or arrange a pre-purchase vehicle inspection.

Wear and tear. All cars eventually (without continual upkeep) will fail. At some point, the body will rust through. The engine might go kaput. Costly mechanical components can break. At some point, a second-hand car that isn't a classic model will stop being cost-effective to repair. The trick is to buy a used car with plenty of life left in it, and then sell it before it starts becoming a drain on your finances. Car manufacturers only expect some vehicles to have a lifespan of 8 years, while others will last longer (up to 15 years). Realistically, at 180,000–200,000km+ on the clock, a car is getting up there in years. After covering that distance, major components like timing chains and clutches will most likely need replacing.

Dodgy sellers. There are rogues out there who might try to sell you a stolen or encumbered car, but a pre-purchase vehicle report should help reduce the chance of this.

Used first car buying checklist

If you know very little about cars, buying a used one can seem intimidating. Factoring in the price of a car, which is often the second most expensive item people own after their home (or is the next biggest expense after rent), it's understandable you might be wary of buying a pre-owned first car.

Using this checklist, you'll be able to determine if a car is wrecked or represents a sound purchase.

First car research

    • Calculate your budget (how much can you afford to spend either outright or per month)
    • Create a list of your likes, needs and wants from a first car
    • Read car reviews
    • Read owner reviews on sites like productreviews.com.au
    • Compare specs, pricing and dimensions (boot, car width, length and height, etc.)
    • Check for car recalls
    • Search Google for "Car [insert make and model] common problems" to learn of frequent issues others have experienced with them
    • Know used car values (RedBook is a great resource for this)
    • Check compulsory third party (CTP) and rego costs
    • Calculate estimated annual fuel costs at Green Vehicle Guide
    • Consider getting pre-approval on a loan if you're thinking about buying a first car using finance (so you can bargain with confidence that you'll be able to get a loan)
    • Create a shortlist of models you'll look at
    • Start looking online for car listings on your shortlist. Pay particular attention to the kilometre reading and photos. What kind of condition does the car appear to be in? Does it have seat and steering wheel covers? (These can hide wear to the upholstery.) Does the body have matching paint on all panels? (Different textures and hues may indicate the car has been repaired at some stage)
    • Is the odometer reading low for the vehicle's year? The yearly averages referenced are between 12,000km and 15,000km. If a 10-year-old car has covered 60,000km, that could be considered low for the model year
    • Do a PPSR search to check the car's details match up with the sales listing. You can also see if it has been written off, stolen and whether it has outstanding finance (a security interest registered on it)

Viewing your first car: Exterior checks

    • Is there visible corrosion (rust) on the bodywork? Does the body have holes in it?
    • Are the wheels scuffed?
    • Do the tyres have more than 1.5mm of tread left?
    • Do the tyres have any visible damage (cuts/gouges to sidewall, objects embedded in the tread, carcass showing, wires poking out)
    • Check all the tyres. Are they matching (same brand and item number), do they have even wear? (If the tyres have bands of wear on the treads, this indicates it needs re-aligning, the tyres aren't balanced or a mechanical component has worn excessively)
    • Inspect all windows. Are there any cracks or deep scratches? Does the windscreen have chips or repairs? Are there sweeping scratches across the windshield (this happens when the wipers are worn and have been left on too long)
    • Do all the panels match? Any different coloured panels or patches could indicate accident repair
    • Are the panel gaps uniform? (doors, bonnet, boot, etc.) – if not, this could indicate a poorly repaired vehicle. Do the doors, bonnet and boot tailgate all open and close without excessive force? Are they rubbing? This can indicate a poorly adjusted catch, improper fitment or a damaged bodyshell
    • Are the body components securely fastened? Do you see any cable ties holding bumpers for example? (Unless it's a drift car, this is worrying.) Has anyone tried to tape up the body?
    • Do the bonnet and general bodywork have scratches, chips or peeling paint/clear coat?
    • Is there any missing exterior trim? Are there any loose exterior components like bumper strips or sills? Is the fuel filler flap present and correctly opening and closing?
    • Do the door locks work correctly? Are they visibly damaged? (This could indicate a theft attempt)
    • Does the body/paint have any dents or scratches?
    • If the vehicle should have mudflaps, are those present and undamaged? Mudflaps can get snapped thanks to aggressive driving over rough terrain or kerbs
    • Are the headlight and taillight lenses clear (not milky looking)? Cloudy light enclosures diffuse the light output. This happens due to exposure to UV light
    • Are the wing mirrors damage-free and firmly attached?
    • Do all exterior lights work correctly?
    • Is the aerial/radio antenna undamaged?
    • If it's a soft-top, is the hood free of tears, algae and loose stitching? Has the material faded? Does it operate as it should? Does it fit correctly, with no leaks?
    • Is the exhaust securely attached? Is it missing the tailpipe? Does the exhaust have corrosion on it? Can you see any holes in the exhaust system?
    • Do the wheels have scrapes, dings or chips? If alloys are fitted, take a close look, are there any small cracks in the paint on the wheels? Do the wheels have cracks in them? What condition are the wheel nuts (rounded wheel nuts can be a pain to remove)? If the car has locking wheel nuts, is the correct key in the vehicle's tool kit?
    • If the wheels are steel, are the wheel trims present? What condition are those? Heavy damage on the wheels can indicate the suspension and underbody components have taken a bash at some stage. If there are no wheel trims, are the wheels generally rust free?
    • Are there any wheel weights present on the wheel? Does it look like one wheel has a lot more than the others? Have they worked loose and gone missing?
    • Is the registration plate present and properly affixed?
    • Are the brake discs heavily rusted? This shows the car hasn't been driven lots. Is there a clear band of shiny metal, surrounded by rust? (The brake discs might need replacing, along with the pads.) Does the car have rear drums? How do those appear?
    • Tapping the panel with your fingernail, can you hear tonal differences in one panel? It might have been repaired with body filler. You can also use a magnet (with tape on to prevent scratches) on steel panels.
    • Does the paint colour match the door sills or the bulkhead (the metal divider separating the engine bay and passenger compartment)? If not, the car has been resprayed and you need to ask the seller questions about this.

First car mechanical components check

    • Check for oil leaks. It's not unusual for an older car to have a minor oil leak. But, a heavy oil leak is a sign that a gasket has broken down. This can also suggest a car's engine or gearbox has run low on oil at some stage, meaning the internal components will have worn more versus a car with the proper oil levels
    • Is the engine oil milky coloured? Is it frothy or aerated? It should be a deep amber or black colour
    • When running the engine, listen for unusual sounds. Some engines sound rickety (especially 3-cylinders), but in general, they should be relatively quiet, with a smooth and rhythmic operating noise. If the engine surges or struggles, that's a sign something's not right. If it backfires, it's not right. If it makes clunky, metallic whirring or banging noises, something isn't right
    • If the car fails to start on the key, or labours when first turning over, that's an indication that either the battery is low (which could mean the car has been parked up, or the alternator isn't working and the seller has used a battery charger to juice up the battery, or that the battery is old and needs replacing). This could also indicate a problem with the fuel pump, blocked fuel lines or a gunked-up fuel filter. These symptoms can also result from using poor quality fuel, allowing fuel to sit in the system for a long period or contamination of the fuel system
    • With the engine off, take a look under the bonnet. Everything should be neatly secured, with nothing loose. Check for evidence of missing bolts and components. Visually check for oil leaks. Inspect hoses for splits, or build-ups of corrosion or powder. Make sure the wiring loom is in good condition (no bare wires indicating someone has repaired it improperly, no signs of corrosion, insulation and securing brackets in place)
    • Check the coolant level. That's an easy fix but a low reading could suggest the head gasket has failed or the car has been running without enough coolant. Be careful to let the engine cool down if it has been running, as the expansion tank can release super hot steam when opening
    • Check the brake/clutch reservoirs, do they have the proper level?
    • Check the oil level. When checking, make sure the oil doesn't have shiny pieces of metal in it, indicating something has collapsed or worn excessively inside the engine. If you notice there's water in the oil, the head gasket could have failed. If the oil level is too high, the owner may have overfilled the engine with oil, causing damage, or the head gasket could have failed
    • With the engine turned off, inspect any visible belts or timing chains. If the belts look frayed, that's a sign they are about to fail. See if there's play in the belt pulleys, if there is, they need replacing
    • Does the engine bay look squeaky clean? While you may be buying your car from a vehicle detailing enthusiast, this could also be done to hide potential signs of failing components or to make the car seem newer than it actually is
    • Inspect the engine, does it have the same brand/logomark as the vehicle?
    • Do a visual check for rust and corrosion on the chassis/bodywork. If you can see lots of orange rust spots, especially holes caused by corrosion, it might be time to walk away
    • Check that the radiator isn't leaking
    • If you can feel a lot of vibrations running through the car when it is running, the engine mounts might need replacing (this will happen to all cars eventually if not replaced). When the engine is running, if the engine is wobbling a lot (a certain amount is normal), it could also indicate this
    • Check with the owner that all belts, timing chains and other consumable parts have been correctly replaced according to the manufacturer's specified time schedule
    • Are there any lights showing on the dashboard?
    • Does the car make a groaning sound when turning? This could be a sign the steering pump, ball joints, steering rack or gear is worn
    • Check the rubber boots on the propshafts and transmission to make sure they have no splits or cracks
    • Look for signs of grease being thrown from components like the CV joints and propshafts, meaning they might have run without enough lubrication at some point
    • Grabbing each wheel at 9 and 3 o'clock, give them a rock to see if you can feel knocking, which might indicate worn/loose suspension/steering components

First car interior inspection

    • Inspect the steering wheel and gear knobs. Are they heavily worn? Has someone put a steering wheel cover on? Does the wear match your expectation, judging by the odometer reading? Do they have chunks missing?
    • Do any of the doors jam?
    • Look at the seats and upholstery. Are they torn, worn, threadbare or do they have an odour? Are there stains, indicating big spills or even leaks?
    • What's the headliner like? Is it sagging? Does it have damage? Does it have damp spots (indicating a leak from the sunroof perhaps)? Does it have any stains (again indicating a leak)?
    • Jiggle in the seats to make sure they are properly fixed down and there are no springs that will dig into your back
    • Are the carpets wet? This can mean there's a leak somewhere, either the door/window seals are no longer effective (or missing) and there could be unseen rust and corrosion behind the trim. This could also mean the car has electrical problems (if connectors are getting moist)
    • Check the seat adjusters and steering column adjustment all work as expected
    • Take a peek under the carpets and floor mats to look for any damp or rust
    • Look in the boot. Are there signs of damp? Are all the trim pieces present and secured? Are the carpets in good condition or are they covered in dog hair or tufts due to heavy wear?
    • Check the spare wheel, is it present? Some cars have spare wheel repair kits now. Make sure these are present, in date and not damaged. Check the vehicle toolkit is present and has nothing missing. Has the car jack rusted?
    • Do the windows wind up and down with minimal noise? If they are power windows, do those work properly? Does the one-touch up and down work (if not, the battery may have been recently disconnected)?
    • Do the mirrors adjust properly? If they are powered and electrically heated, do those functions work?
    • Try the radio. Make sure all the buttons work as expected. Cycle through some channels. Try the CD player. If you can, hook up your phone to try the smartphone connectivity. Are all speakers emitting sound?
    • Is the rearview mirror present (some vans won't have them)? Is it damaged? If it has auto-dimming, does that work?
    • Check all interior lights are operational (headliner, vanity mirrors, doors, rear cabin, boot space, glove box)
    • Satellite navigation – does this work? Does it correctly find your location? Do any errors show? Has it been kept up to date?
    • Make sure the owner's manual and servicing booklet are present and​ match the vehicle
    • Are the pedals worn smooth? This can suggest the car's mileage is high – especially if it doesn't match what the odometer indicates
    • Does the central locking operate correctly?
    • If there's a sunroof, are there any leaks? Can it be opened and closed with ease?
    • Test the A/C system, does it get properly cold? Does it seem intermittent? Does it smell (this suggests it's not been used much, or the filter needs swapping)?
    • Make sure all dials are functional
    • A cheap OBD reader will let you scan the ECU for error codes
    • Try out the parking sensors and rear camera
    • Check that the boot struts work (worn gas struts won't assist when opening the tailgate or keep it open correctly and can be dangerous). Bonnets also have these sometimes, on premium brands
    • Try all the switchgear. Indicators, horn, ignition barrel, wipers, wiper speeds, washer jets, headlights, full beam, climate controls, steering wheel controls, infotainment buttons, etc.
    • Test the lights. Try the indicators, does one flash faster than the other side? If so, check the bulbs are working. Try the hazard lights, full beam, side lights, parking light, brake lights, reverse and any fog lamps fitted. If the car has daytime running lights, make sure those work
    • How do the seatbelts look? Are there any cuts or nicks? Do they retract properly? Do all the buckles work correctly? Do they unlock? If you pull the seat belt sharply, does it jam up, as it is designed to in a crash?
    • Do the cigarette/12V auxiliary ports work (take a USB adapter with you)?

First car test drive

    • Does the hand brake work? Does it hold the car on a hill?
    • Does the engine start easily?
    • On a manual gearbox car, are the gear changes smooth and crisp? Is it hard to find the gears or get in gear? Can you hear whirring or grinding noises from the transmission?
    • With an automatic car, check that the car changes gears properly, make sure it isn't excessively noisy or clunky. Also, if you're accelerating but the car seems to be sapped of energy, the transmission could be slipping
    • Keep an eye on the gauges and the dash. Are there any warning lights? Does the water temp stay stable without overheating? Does the speedometer work?
    • Can the car hold a stable idle (without fluctuating revs too much, or the lights dimming)?
    • Accelerate hard, is it progressive, without "dead" spots? Does the car dally before responding?
    • With the steering wheel in the middle position, does the car pull off to one side?
    • Can you feel any knocking, grinding, thunking or tapping when driving?
    • Turn the steering wheel to lock to lock while parked, does it clack or make any strange noises?
    • Is there a dead spot in the steering wheel?
    • Try making a large circle in a car park. Does the car judder or make any strange noises? Is there any knocking?
    • Make some left to right zigs and zags (in a car park). Can you hear or feel clunking or knocking?
    • Brake hard. Does the car come to halt in a controlled way? Does it stay on course, in a straight line? Does the ABS work?
    • How do the brake and clutch pedals feel? Is the brake pedal spongy? Does the clutch bite right at the top or bottom of the pedal travel?
    • Do the brakes seem to grab intermittently?
    • Does the clutch slip?
    • Is the car prone to stalling?
    • Take the car on a high-speed road and try the cruise control (if fitted). Also listen for noises, bangs or any other strange sounds
    • Take the car around a town. How does it deal with potholes and drain covers? Does the suspension feel like it's working? Can you hear any banging as you go over bumps? Does the suspension settle quickly?
    • Try the 4WD system and low-range transfer box (if the vehicle has them fitted)
    • Generally listen for knocking or thumping. If the seller wants to put the radio on, or talks a lot, ask them to be quiet – they might be trying to cover something up
    • Does the exhaust smoke heavily? Are there plumes of black sooty smoke coming from the tailpipe when accelerating? Do you see blue or white smoke? Excessive smoke isn't good. Black smoke indicates the engine is being overfuelled or cannot completely burn all the fuel particulates. This creates sooty brown or black smoke. White smoke can indicate there's moisture in the exhaust emissions. Blue smoke often means the engine is burning excessive oil. If you see blue smoke on an older car, that can mean the engine is overly worn
    • Can you smell a burnt odour?
    • Does the car seem to lose power?

After the test drive (be careful, everything will now be hot!)

    • Check again for leaks
    • Inspect the engine bay for any signs of moisture
    • Check the coolant level
    • Take a look at the tyres to see if they are still holding pressure
    • Ask to see the vehicle's documentation, including past repair bills, etc.
    • Make sure the vehicle's VIN matches the one shown in any documentation

Note, while the above checklist is a good place to start, it is not a comprehensive list. If you are uncertain about buying a used car or have little car knowledge, get a pre-purchase inspection or take along a mechanic with you.

Questions to ask a new car dealer when buying your first car

QuestionWhy should you ask this?
Can I do an extended test drive?A weekend test drive (or longer) is a great chance to try a car and see how it fits with your lifestyle. The longer you test drive a car, the more time you'll have to discover its pros and cons.
Is that your best price?At a car dealer, you can almost always get money knocked off the price (unless the car is in massive demand). Dealers know the amount they can knock off, so this opens up the negotiations. If they say yes, politely but firmly say "I'd like to pay this price…". If they are not willing to bargain, you can always leave and go to another dealer.
Can you sweeten the deal?See if the dealer will throw in metallic paint, some free services or modest options as a way to secure your sale.
What are the servicing costs?Many car makers package in capped-price servicing for a set number of years, so ask about the servicing intervals and costs. That means you'll know how much you can expect to pay over the coming years.
Are you running any sales or promotional incentives on similar cars?You might be able to jump a grade to a "special edition" or runout model for not much extra.
Does this model have any options fitted?Buying a demo car is a great way to save some money. Dealers often fit several of their favourite options to try and make the car as attractive as possible.

Questions to ask a private car seller/used car dealer

QuestionWhy should you ask this?
Why are you selling the car?Of course, why a person is selling a car is an interesting question. They might have just bought a new car or have developed a medical condition that means they can't drive. But, something you're also looking for is signs of deceit. If the person looks shifty, asking questions like this can help you find out whether they are genuine.
What kind of driving did you do?Cars that spent most of their lives on the motorway generally had to work less. That's good for longevity as components should have experienced less stress.
Did you use the car to tow?Towing can put extra stress on a vehicle's components.
Has the car ever been in a smash or had extensive repairs?You'll want to know so you can make sure the repairs have been carried out to a high standard.
Can you legally sell this car?If they say yes, and the PPSR search suggests otherwise – walk away.
Have you had any problems with the car? What did you do to fix them?It can be tricky to seek legal recourse if you end up buying a lemon, but a used car seller has to be truthful (to the best of their knowledge) when selling a car.
Is there any outstanding finance on the vehicle?If there is, make sure you're fully versed on how this works.
Have you fixed these recalls? (Present with a list of outstanding recalls for vehicle age)Make sure the person has kept up to maintaining the vehicle and that you're getting as safe a vehicle as possible.

Should I buy a first car from a dealership or a private seller?

Stuck wondering whether to buy your first car from a dealer or private seller? Here are the pros and cons.

Pros of buying a first car from a dealer

Buying from a car dealer means you have a physical place to go back to if you have any problems. Also, when buying from a dealer you are protected by Australian Consumer Law that says a new car must:

  • Be of satisfactory quality – free from defects, safe and sturdy
  • Be fit for purpose
  • Match the description of the vehicle (or demo model)
  • Have replacement parts and repair locations available

You can find out more information about car purchasing laws at the Australian Competition & Consumer Commission.

This can be great peace of mind for first time buyers. Plus, you're dealing with a licensed car seller, who in turn has agreements in place with car manufacturers and distributors.

Another benefit is you get the chance to sample different models and trim grades back to back, so you can directly compare them.

It's great to buy from a dealer because if you pick the right time of year, like the EOFY sales, you can grab a real bargain. You might be able to save thousands of dollars on the purchase price of a car. Dealers also expect car buyers to haggle with them.

Walking around their forecourt, you might spot a car on special sale, meaning you grab a rare bargain. People also appreciate that car dealers can take trade-ins (though if this is your first car, it's unlikely you'll have one unless your parents give you their old banger to part exchange). Also, many buyers are tempted by the convenience of going for in-house finance.

It's worth mentioning that buying from a car dealer can be a streamlined process that might help you save time. You go to the dealer, you pick the car you want, you pay and you collect your keys.

Cons of buying your first car from a dealer

Dealers are all well and good, but there are some downsides to getting a good first car from them:

  • Dealers have big overheads. They have to pay for things like their premises, complimentary coffee, their franchise, signage, car detailers, wages for customer service representatives and salespersons, advertising and utility bills for a start. Some of that translates into the margins they'll add onto cars.
  • Some dealers are pushy. If they earn commission on sales, they might be incentivised to sell cars, meaning they try all the tricks in the book to sell you a car. Many first time car buyers (and frankly, the majority of drivers) find that unappealing. However, a lot of car manufacturers now sell their cars online – which can help you cut out the middle people.
  • Used cars on sale at a car dealer will often be a thousand (or more) dollars more expensive than the equivalent model on the used car market, because of their overheads.
  • The selection of cars available at the time depends on what's in stock. Also, some car dealers will have been struggling with order delays due to semiconductor shortages.

Pros of buying a first car from a private seller

By inspecting a car thoroughly (ensuring you don't buy a lemon), you can save money buying a used car privately.

More times than not, there'll be some wiggle room on the price if you're willing to strike a deal there and then.

You can swoop in and benefit from someone's changing circumstances, grabbing a genuine bargain if a seller is in a rush to get rid of a car.

Some drivers are obsessive in their maintenance and care for their car, meaning you end up with a very well looked after second-hand car while saving money.

Used car sellers might be more willing to meet you somewhere convenient, such as near your work or home.

Buying a used car is generally a less "salesy" experience than purchasing a first car from a dealership.

Cons of buying a first car privately

First up, the seller could be an out-and-out crook. In all the times I've bought a second-hand car privately, only one guy was genuinely a bit of a rogue; he didn't disclose some problems he surely knew about. A day after buying the car, it needed some fairly major repairs and funnily enough, the guy dropped off the face of the earth… Then again, a seller genuinely might not know that their car is about to mechanically fail.

It can take quite a bit of time to sift through online ads, weed out the chaff and then contact sellers to arrange viewings for the contenders.

Sometimes, used car sellers can be a little slow in filling out all the necessary paperwork to get the sale done, which is frustrating.

Who should I buy my first car from: A dealer or a private seller?

It depends on your circumstances and the car you want. If you want a brand new car, a car dealer or broker is your only choice. But if you're willing to accept a little more risk and can arrange things like a pre-purchase inspection, buying from a private seller can save you thousands of dollars.

Should I save up and pay with cash or get a car loan?

That depends on your circumstances.

  • If you've been saving up for your whole life and have a good bit of cash tucked away, you might be able to afford to buy a car outright. This generally will save you money in the long run, as you're not paying out interest that comes with other finance methods. Then again, cash flow might mean you prefer to take out finance
  • Car loans are great when you don't have the money to pay for a car outright. Plus, it means you can break down the significant purchase of a first car into smaller monthly repayments. You have the option to secure your car against the loan (for better interest rates so you pay less throughout the car loan), or going for an unsecured personal car loan – which has restrictions on the type of car you buy, but fewer requirements on how you spend the money.
  • If you have a job, your employer might offer novated leasing options. This can bag you a brand new car of your choice, and it can have some tax benefits. That's because the car repayment is taken from your pre-tax income.
  • Borrowing money from relatives. You might be fortunate and have parents or family who are willing and able to loan you the money for your car. That's great, but it's worth drawing up a simple contract on how you'll repay them – as many family rifts have been caused by money. Plus, your family might not take too kindly to you modifying the car while you still owe them money.

How to compare first car loans

There are different kinds of car loans, but the following are some of the features you need to consider:

  • The repayment period. This is the length of time over which you'll be repaying the loan. Check whether the repayments themselves will be enough to cover the full amount or whether there's a balloon payment at the end.
  • Repayment flexibility. Can you repay a loan early to save money? If this is possible, it can be well worth looking for a loan that lets you make early repayments at low, or no, extra cost.
  • The rates. The lower the better, but there are also significant differences in the different types of rates. Fixed rates will stay predictable and the same, while variable rates can change over time.
  • Secured vs unsecured. Secured car loans usually carry better rates, but involve putting the car up as collateral. This means the lender might reserve the right to repossess the car if you're unable to keep up with repayments.

Different types of loans will often include set features. The actual rates you can get and whether you're able to get an unsecured loan are determined on a case by case basis. If you're a reliable borrower with a good credit score, you might be able to get lower rates and preferable options.

This is just the tip of the iceberg. A car loan is a big financial deal and it's worth learning about it and comparing a range of options before committing.

Here are some of the terms you might want to know about and a detailed explanation to help compare loans more effectively.

I've made my decisions and I'm ready to buy my first car. What else do I need to make sure I can drive away?

That's great!

Don't forget to gather together all the necessary documents for your finance of choice. You'll need things like some bank statements and ID. We've created a full list of the documents you'll need to apply for a car loan. Comparing car loans will help you pick a loan that suits your circumstances and is more affordable.

Then you need to think about car insurance. CTP is fine, but it's really the bare minimum level of car insurance cover. Comprehensive car insurance or third party fire & theft will help better protect your first car.

Make sure you know the prices for servicing your car. If you're buying new, you might get a few years of capped-price servicing. Or, if it's a used car, you can check car running costs – which are published by motoring clubs like RACV.

If you don't get roadside assistance with your car purchase (many new cars come with at least 12 months coverage), you can buy additional cover. Make sure to compare your roadside assistance options.

Registering your car

If this is the first time you're registering a vehicle in your name, you'll need to go to a road services registry for your state to provide identification and get put in the system.

If you're registering a car for the first time, you will need the following:

  • Proof of your identity and residential address. A driver's licence will be enough.
  • Proof of registration entitlement. This must show that you are the legal owner of the vehicle. Depending on how it came to be in your possession, it might be a sales contract or other proof of purchase, a written letter from a solicitor saying it was bequeathed to you or other written evidence.
  • A hard copy of a receipt for a green slip (NSW and the ACT, and where applicable QLD, only).
  • An identity and safety check report issued by an authorised safety check station, along with proof of repairs if the car is a repairable write-off.
  • Number plates, if they are available.
  • A filled-out Application for Registration form.
  • Payment for general registration expenses, stamp duty, taxes and number plates.

How much should I budget for up-front car costs?

You will need to pay the following fees:

  • General registration charges
  • Stamp duty; this is a tax included in the price and is a percentage of the vehicle's value
  • New number plates
  • Compulsory third party (CTP) insurance premium if you don't have it already
  • Vehicle safety check fee if you haven't done it already

The amounts vary based on the state and on the type of vehicle you have. It also depends on what costs you've already paid. All up, you might expect to pay (very) roughly $500, or significantly more for expensive (over $45,000 cars), heavier vehicles or cars that are used for business.

What about ongoing car costs?

In addition to the significant one-off expenses, like the first-time car registration costs and the cost of buying a car, many of the major expenses are ongoing. You probably don't want to buy a car unless you know you're able to keep up with the costs.

  • Registration renewal. Car registration typically lasts for 12 months and you will need to renew it annually. Generally, you'll receive advance notification when it's time to renew. A renewal fee will apply, typically around $60–$70, depending on your state and the vehicle. To renew a car, it also needs to have recently passed a safety check.
  • Insurance. Your CTP insurance and additional car insurance both carry premiums that you need to pay on an ongoing basis. If you fall behind, your cover will lapse and you won't be insured. The costs depend on your type of cover. Depending on the insurer, you can often choose whether you want to pay premiums fortnightly, monthly, quarterly, half yearly or annually. It will often cost less overall to pay premiums annually.
  • Petrol and maintenance. The car's running costs naturally include gas and ongoing maintenance, both of which depend on how far and how frequently you drive as well as on what kind of car you have. Practising routine maintenance costs hardly anything and can save you a lot of money over time.

What insurance should I get?

Jump ahead to your state:

NSW QLD NT SA WA ACT TAS

All cars must have compulsory third party (CTP) insurance, often known as a green slip. In NSW and the ACT, you must get a green slip before registration. In all other states, you can do it at the same time as vehicle registration.

CTP is an insurance policy that covers you, other drivers, any passengers and pedestrians. Basically, it covers anyone who you might injure with your vehicle or a trailer you're towing. In the event of an accident, the at-fault driver's CTP insurance will be the one that needs to pay out. For example, if another driver injures you, their CTP insurance will be the one that pays out.

CTP insurance does not cover any kind of property damage. If you are deemed to be at fault, you are not covered for any injuries except very severe ones, such as spinal cord damage or traumatic brain injury.

The procedure for getting CTP insurance, and your options, depends on your state.

New South Wales and the ACT

Here, it's a bit more complicated. There are 2 different types of CTP insurance available:

  • Standard CTP insurance. This is the same cover as everywhere else. It only has minimal cover for your injuries if you're found to be at fault for an accident.
  • At-fault CTP insurance. This costs more but expands the cover to pay for more of your own injuries in the event you are at fault for an accident.

There are 6 different insurance providers which offer CTP insurance in NSW and the ACT. Fortunately, the standard cover offered by all of them is, for the most part, exactly the same, with the only difference being the price. Only 3 of these insurance providers offer the optional at-fault driver cover. The easiest way to get CTP insurance here is to do the following:

  1. Decide whether you want to pay extra for at-fault driver cover.
  2. Get a quote from all 6 insurers, or all 3 if you know you want at-fault cover.
  3. Pick the cheapest.

None of the insurers is consistently cheaper than another because they set prices in different ways. What's cheapest for one person, depending on their age and the type of car they drive, might not be the cheapest for someone else.

South Australia, Victoria, Tasmania, Western Australia and the Northern Territory

In these states, you get CTP insurance at the same time as you register your vehicle, and the price is automatically included in registration and renewal costs.

Queensland

You can get CTP insurance at the time of registration and switch providers when you renew your vehicle registration, or you can take out a policy directly from 1 of the 4 Queensland state CTP insurance providers. There may be differences in the cover and the price, and you will generally get the most value for money by comparing the 4 different insurers and picking a policy directly.

If you'd prefer a more hassle-free method, but without any guarantee of the lowest price or highest level of cover, simply get your CTP cover while registering your car.

Additional car insurance to consider

Once you have a licence, CTP insurance and your vehicle is registered, you are able to legally drive. However, taking it on the road is still a major risk without additional insurance. Your car is still not insured for any damage, and you aren't insured for any kind of third-party property damage at all. In other words, you will need to pay for any property damage you cause while driving, whether it's thousands of dollars for scratching a BMW's paint job or hundreds of thousands for running into a house.

You have the following options for additional car insurance:

  • Third-party property only. This is the cheapest, minimal level cover. This covers you for damage that you might cause to other people's (third parties) vehicles or property.
  • Third-party property with fire and theft cover. This costs marginally more than third-party only cover. It covers you for third-party property damage, as well as covers your own car against fire and theft, two of the most common causes of damage.
  • Comprehensive car insurance. This is the complete cover option, and typically the only type of car insurance which can cover your car for damage sustained in an accident. It always includes third-party property cover, and depending on the specifics of the policy, it can also protect your car from hail, fire, theft, vandalism and more. It also tends to include additional benefits like roadside assistance, cover for towing costs, rental car hire when needed and many other options. It's the most expensive type of car insurance, but generally not as expensive as one would expect compared to the more basic types and given the extra protection it offers.

There are a lot of different providers offering car insurance all around Australia, and costs vary widely between states. To find the right level of cover and the best value for cover, you can go around and get quotes from a wide range of different insurers, or you can use a comparison site to see a range of options in one place.

Tips for saving on car insurance

The number one tip for saving money on car insurance is to stay flexible. You can generally change car insurance providers without penalty at each policy renewal period (generally annually), so if you notice your premiums creeping upwards, check for discounts and see if you could save more by switching.

The no-claim bonus is one of the most significant ways of keeping premiums low. It works differently with different insurers, but generally, this is a discount that builds over time when you don't make claims. Often, when you switch providers, the new one will recognise the no-claim bonus you've built up with your previous insurer and will award you their equivalent-level discount.

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Writer

Ben Gribbin is an automotive writer at Finder. He is a life-long car enthusiast, bringing many years of experience working with and writing about cars. During his time, Ben has been a freelance writer, editor and reviewer for a number of leading publications across the UK. He was voted the Guild of Motoring Writers Breakthrough Blogger in 2015. See full bio

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