The ultimate 10-point checklist for financing your next vehicle

Posted September 2017

Has your old car finally kicked the bucket? Does a new addition to the family have you searching for something a little roomier? Your first home aside, purchasing a car is one of the biggest purchases you'll make!

Cars are expensive. According to Autocar, a new vehicle in New Zealand can run you anywhere from $34,990 to upwards of $250,000. That's a large investment. 

It's easy to get caught up in the excitement of this big purchase and overlook things you could be doing to ensure you’re making a safe, sensible purchasing decision for you, your family, and your bank balance.

The decisions you make now can have a dramatic impact on the state of the vehicle, and your finances, when you finally pull into your driveway. A high loan rate could see you paying more than you need to, while a dodgy vehicle isn’t worth the paper the contract is written on.

To help make the process painless, we’ve compiled a checklist full of crucial things you need to consider when financing a new or used vehicle.

To start? Let’s look at your financing options...

1. Pick the best finance option for you

When it comes to financing your next vehicle purchase, you’re spoiled for choice:

• Lack the funds? Then borrowing money for a car might be your best bet. A loan is a great way to speed up the process, especially if you need a new set of wheels sooner rather than later.
• Putting money away for a rainy day? Then dipping into your savings account could be the way to go. You’ll save yourself a bunch in loans repayments and costly interest.
• Have some time to spare? Then setting your money aside in a term deposit investment where it will earn high interest might be worthwhile.

There are other factors to consider, too. If you’re applying for a loan, there’s the question of what kind of finance is best for you. Or perhaps your credit score is lacking? In this case, you might struggle to land a loan with a low interest rate, though there are ways you can - and should - improve this score before you submit your application.

2. Resist the temptation to start window-shopping

Window shopping can be fun, but if you're taking the finance route then resist the temptation to start too early. Research is great, but going shopping before your application has been given the green light could do more harm than good. 

For one, without cash on hand, you'll struggle to negotiate a better deal, while committing to a purchase before you’ve been approved could leave you struggling with debt if the bank or credit union rejects your application.

3. Do your homework

A compact car for zipping in and out of the inner city streets? A 4x4 for those weekends spent adventuring across New Zealand’s mountain ranges? A gas-guzzler or environmentally friendly electric? It’s safe to say there’s a vehicle out there to suit almost any scenario and almost every budget, but which one is right for you?

There’s little point in forking out the extra cash for a ute that’s expensive to run and maintain when you’re only using it to drive to work during the week. Just as there are few reasons to pick up a small two-door when your growing family needs extra room to expand.

Purchasing the wrong car can make for a costly mistake, so do your homework beforehand and consider which vehicle is the best fit for you.

4. Don't forget to budget for added expenses and extras

When it comes time to budget for your next big purchase, it's easy to overlook smaller expenses. There’s the registration to consider, both first and third-party car insurance, as well as tyres and mechanical checks that all add up.

Whether new or used, that dream ride will cost more than the advertised price, so take these additional expenses into account when you're applying for finance. You don't want any nasty surprises popping up that you can't afford! 

5. Used or new? That is the question

If your budget’s stretched thinner than butter on toast, then a used vehicle might be your best bet. In this case, TradeMe and AutoTrader are great places to start.

Buying used does come with its fair share of caveats - you'll want to be extra careful you don't end up with a lemon! - by as long as everything checks out, what's a few extra KM's on the clock if it means more money in your bank account? 

On the other hand, you could consider buying new if your budget allows. You'll have the added benefit of driving away in a vehicle that's fresh of the production line, as well as that unmistakable new car smell.

Ultimately, what you decide depends on your personal finances, and just how much you're comfortable spending.

6. Take it for a spin

When’s the last time you bought a new pair of jeans without first trying them on? If you’re a thrill-seeker or a risk-taker, then maybe you have, but the chances of them fitting when you do aren’t high. The same principle applies when buying a new or used car.

Research, reviews, and YouTube videos are great, but taking the latest four-wheeled member of your family for a test drive is the best way to put it through its paces. How’s the ease of entry and exit? Is it easy to drive? What’s the visibility like from the driver’s seat?

Consider the smaller details, too. Look out for features - or a lack thereof - that might start to niggle over time. These may seem insignificant now, but you’re going to be spending a lot of time in, and a lot of money on, your new ride, so you’ll want to make sure it’s a perfect match.

7. Haggle on the price and get a great deal

Ok. So you’re not about to haggle the cost of your groceries at the checkout, but big purchases like a new or used car are the perfect opportunity to flex your negotiating muscles and land a great deal.

Nervous? Don’t worry. It can be intimidating to demand that you get to pay a lower price, especially if this is your first time at the negotiating table. This is where your homework comes in handy: knowing how much other vendors are charging, as well as having cash on hand are just a few ways to haggle for a better price.

8. Ask for a pre-purchase inspection

Before you sign on the dotted line and hand over the cash, it’s important that you know what you’re getting into. The car might be great. The offer? Even better. But be careful not to let that new car smell go to your head: we’ve all seen the horror stories on TV. You’re out to buy a car, not a lemon!

So when you’re working through the purchasing process, give yourself enough time to go over the car, and ensure everything’s in working order. If your technical knowledge isn’t up to speed, have a local mechanic, the Automobile Association, or VINZ give it a good once-over.

9. Make sure there’s no money left owing 

This one’s easy to forget, but if you’re buying used, there’s a chance a previous owner may still owe money on the vehicle you want to buy. Money that you may be liable for if the purchase goes ahead.

Thankfully, this one’s also easy-as to check. Just jump onto the Personal Property and Securities Register (PPSR) website, and make sure there’s no money currently owing. While you’re at it, check that the vehicle hasn’t been registered as stolen via the New Zealand Police website. It’s better to be safe than sorry.

10. Don’t forget to transfer the registration!

There’s so much paperwork exchanging hands when you’re buying a used vehicle that it’s easy for this one to get lost in the madness, but it’s too important to forget. Once you’ve handed over the cash, be sure to transfer the ownership and registration of the car to your name, that way there won’t be any awkward future arguments over things like fines or speeding tickets. This is easy to do online via the NZTA website.

Are you ready to buy a new or used vehicle? Check!

Life is stressful, but buying a new or used vehicle doesn’t need to be. By running through our ten-point checklist, you’ll ensure you have your finances sorted, are able to haggle a better price, and make the drive home knowing you got the best deal possible.