Buying and Owning a Vehicle in Queensland
What you need to know about buying and owning a car in Queensland, by The Neighbourhood Hub’s Financial Counsellor.
The cost of owning a car
Buying a car comes with lots of extra costs. The costs are different in each state, but here are some examples of the extra costs you might need to pay:
Stamp Duty - a payment made to the state government when you buy a car.
Motor vehicle registration - 3, 6, or 12 months, paid on all vehicles and if it’s due on the vehicle you buy, you must renew it. In Queensland, Compulsory Third Party (CTP) insurance is included. This insurance covers injuries you may cause to other people.
Registration transfer fee - if the car is already registered you must pay to have this transferred to your name.
Car insurance - to cover damage to your car, other people’s cars and yourself.
Petrol - will be your biggest single running cost.
Regular repairs and service - to keep your car running.
Buying a car
Which car is right for you?
It pays to focus more on the functions of the car than how it looks. Ask yourself:
Are you licensed to drive a manual or will you need an automatic? Manual cars are often cheaper than automatic cars, and can cost less to repair.
How much can you afford to spend on looking after your car? A small (1-1.6 litre) car makes sense if you’re mainly driving around the city and want to save fuel. Larger cars have higher costs for registration, servicing, tyres and petrol.
Are you looking for a new or second hand car? While new cars may seem more attractive, a good used car can be just as effective and could save you thousands.
Will the car have a good resale value? This will be handy if you plan to sell or trade in your car in the future.
Set your price range
Work out exactly how much you have to spend on buying a car. On top of the sale price and the yearly costs mentioned above, when you buy a car you also have to pay for an inspection, transfer of registration and stamp duty.
Here are some tips on getting a good deal:
Save hard - You’ll have more options if you’ve been saving or can arrange a car loan in advance.
Do your research - Decide on the type of car you want, then visit a few dealers, look in the paper and go online to compare prices. Decide on a maximum price.
Stick to your maximum price - When you find a car you like, don’t be tempted to go over your maximum price. If you do, you may not have the money to pay for other necessities.
Try bargaining - You can often get a better price if you bargain with dealers. If they know you’re serious, they may be prepared to do a deal.
Registration expiry dates - Some cars are sold very close to their registration (rego) expiry date. It means that shortly after buying the car, you will have to pay more money to renew the registration, and possibly new tyres and repairs so its roadworthy. Then there’s compulsory third party car insurance. These costs can add up very quickly, so it may be worth looking for a car with a longer rego period.
Car Loans
A car loan is a personal loan for the specific purpose of buying a new or used car.
You borrow an amount of money that you have to repay within a certain period of time (called ‘the term’). You will have to sign a credit contract that specifies the amount borrowed and how you will repay it.
The term can vary, but is usually between 12 months and 5 years. If you don’t pay off the full amount of the loan by the end of the term, or if you can’t afford to make equal payments over the life of the loan, the final payment must be made as a lump sum. While this makes repayments affordable, you may be left with a large amount of money to pay off or refinance when the term ends.
Many credit providers will give you ‘in principle approval’ for a loan, so you know exactly how much you can borrow and won’t be tempted to spend beyond your means.
Dealer Finance
If you buy from a car yard, the dealer might offer to arrange finance for you. Dealer finance may be convenient but its important to shop around to make sure you get a good deal on your loan.
Banks, building societies, credit unions and specialist lending and leasing companies all offer car loans, so check out what’s on offer so you can compare and choose the best loan for you.
Head to RACQ’s website to research car model reviews and safety.
Where can I buy a car?
Private Sale (Friend, Newspaper, Pocket Trader, Facebook, Gumtree, etc)
Ask the seller to show you the following:
A current certificate of registration for the car.
A Safety Inspection Report that is no more than 42 days old.
Proof that they own the car (eg. sales receipt and service records).
If the Safety Inspection Report is marked ‘failed - repairs needed’, this means the car is not roadworthy. Do not buy the car.
Check the Australian Government’s Personal Property Securities Register (PPSR) to make sure the car won’t be repossessed because the owner still owes money on it.
Buying privately means you won’t get a warranty. If anything goes wrong, you will have to pay for it.
Licensed Car Dealership
Buying through a licensed dealer can be more expensive than finding a car privately. Generally, however, buying from a licensed car dealer should give you more protection if things go wrong. A licensed car dealer will give you:
a guarantee that the car will not have any money owing on it;
a cooling off period where you might be able to get a refund if you cahnge your mind. Check the rules for cooling off periods in your state, because sometimes the cooling off period is waived when you drive the car away from the car yard; and
a warranty period on new and used cars.
Auction
Buying a car at an auction will be cheaper, but there is no warranty, no test drives, and no inspections. Make sure you check the paperwork and read the Private Sale section above on researching debts and warnings on pre-owned cars.
Learn about the conditions of bidding at your auction. Many auction houses ask for a 10% or $500 deposit at the fall of the hammer, and payment of the balance within a short period.
Get a vehicle inspection
It may cost a few hundred dollars but getting a professional inspection on a second-hand car will uncover any problems that can be even more expensive to fix later on. A test drive will also help you see if there are any issues.
Smart tip - Check the value of your car by searching for cars online.
Check how many kilometres are on the odometer and that it doesn’t look as if it’s been tampered with. The numbers should line up and the kilometres should match the service history in the car’s log book.
If you’re buying a second hand car, it’s a good idea to take someone with you who knows what to look for, and can explain what to check in a car.
Car Insurance
This presentation was prepared by Natasha Syed Ali in 2020
Download the presentation slides and activities here.
