Five tips for buying a car during a pandemic
The pandemic has caused a lot of upheaval and uncertainty – but one of the few bright spots for Australians is that the economy fared well and it hasn’t tempered their taste for cars. During the pandemic, world car sales decreased by 14%. In Australia (October 2020 vs 2021) new car sales surged 33%. However, this doesn’t mean there are bargains galore out there – but you could save if you research different car loans. Here are our tips:
International supply delays
Due to a global semiconductor shortage, the electronic chips that are critical in car manufacturing are also in short supply. This has cascaded into delays in car deliveries, exacerbated by the fact that on-shore car manufacturing has ceased. Some people are buying now and waiting up to eight months – or even more. One tip is to buy a car that’s already on the dealer’s lot. If they have a car for sale, that means the dealer is losing money by keeping it there. You could drive a good bargain by “taking it off their hands” – especially at the end of the month, when dealers are rushing to make their sales quotas.
A seller’s market
Because there are more buyers out there than cars, it’s currently a seller’s market. The question is, do you wait until things normalise? Or buy now and get the car in a few months and hope it doesn’t get worse? Your patience can be rewarded if you wait until the End of Financial Year or Christmas. Most cars in Australia are sold around those times as dealers try to move their older models to make way for new stock. (A literal ‘runout’ deal.)
Second-hand cars going up in price
As a consequence of new cars being scarce, second-hand cars are also going up in price. If you are going to buy second-hand, make sure you do your homework. That means getting an independent valuation, checking the vehicle’s VIN on the Personal Property Security Register, and going for a test drive. Make sure to bring a friend or family member with you for a “voice of reason” and added security.
Beat the price rise with a good rate on your loan
Oddly, the rise in car prices has not correlated with loans. If you can’t find a cheap car, you may be able to save on your car loan. Managing Director of Savvy Bill Tsouvalas says that carefully researching a car loan or going to a broker can help you save on the back end. “Loans are as cheap as they’re going to get, and locking in a good loan rate now can help you avoid pain if car prices remain high and interest rates go up.” Tsouvalas also says you should look for comparison rates, as they show you the complete price of a loan, as it includes most fees and charges.
Avoid dealer add-ons and upsells
Dealers want to squeeze as much out of you as possible – but don’t fall for their traps. “They might push rustproofing, interior finishes, infotainment centres, or extended warranties. These are all unnecessary. Besides, modern cars are already rustproof!” If you can’t negotiate a reduction in price, try to get something of non-monetary value included instead. “This could be free scheduled servicing, having the dealer pay on-road charges, or dropping the dealer delivery charge – which is a made-up fee to begin with. See what you can get away with!”
Remember to consult a financial professional before taking out a loan. Always look for a licenced dealer, broker, or lender.