How to avoid the hidden costs of a new car
When buying a new car, the list price is only a starting point – it’s essential to factor in running, warranty and car insurance costs to know what you’ll really pay.
1. Know what model you are after but be flexible with the specs
Car dealers love buyers who have no clear idea what type of vehicle they are after. A good salesman can steer the buyer around the showroom and sell them a vehicle that has the best financial incentives for the salesman. Sales managers don’t like stock that hangs around too long, either, since its costs them money in terms of floor plan financing so not surprisingly they may be very keen to shift slow-moving models.
You can make this work in your favour if you know the exact make you’re after and the dealer’s stock controller had a brain fade and ordered a bunch of cars with weird colours. If you’re flexible with the specification level, colour and options, you could walk away with a better deal in financial terms than you would if you ordered a vehicle that’s not in stock.
2. How much are you ultimately paying? Manufacturers list price (MLP) or Drive Away?
There’s a big difference. Drive Away includes dealer delivery, registration and insurance, and is a much truer indication. Let’s use the Mitsubishi Mirage ES, an Australia’s Best Cars category winner as an example that has a MLP of $11,990. Indicative Drive Away pricing increases the cost of the Mirage up to $14,352.
Most drivers are opting for automatic transmissions and in the Mirage’s case that’s an extra $2000. If you don’t like white you need to add $550 for the remaining five colour options. Add $370 for comprehensive insurance and the $11,990 Mirage is closer to $20k than $10k and that’s without any extras.
3. Compare your price with another dealer
How new is your new car? Even if you are buying the ‘2015 current model’ buying in the early part of the year could mean that it was built in the previous. It doesn’t become an issue until trade in time, where the valuer will price it as a 2014, potentially losing you thousands of dollars.
4. How much will it cost to keep your new steed in the drive?
Capped price servicing is becoming the norm but it is subject to variation and excludes items like brake pads and rotors, considered wear and tear items.
5. How extensive is the brands dealer network?
It’s especially important in rural areas where if there is no dealer you may need to travel long distances for service and warranty…
This article is from the NRMA website, you can read the full article here: