Buying a car is an exciting prospect, particularly if you’re buying your first car. It can also be an expensive financial commitment. While price, specifically value for money is a key consideration, other issues which can have a real financial impact are often overlooked.
With the average motor vehicle debt at $19,500, 1 knowing the real cost of buying and running your car is important, as it’s likely you will own it for a long time. To help car buyers make better decisions, ASIC has developed a new mobile phone application – MoneySmart Cars.
ASIC’s MoneySmart Cars app is a free tool which provides practical advice to support the financial decisions you face when buying a car. It provides tips on what you should do before you go to the car yard and what to expect when you're there, so you don’t get overwhelmed and distracted by sales tactics.
Being well prepared before you shop around will help you to make better decisions. You should research your options, know how much you have to spend, shop around for your loan and work out the extras you want so you don’t blow your budget.
The app points out the common car buying traps and provides information on finding alternative ways to finance a car. It provides warnings on hidden costs, including insurance and alerts you to the risks of add-on insurance products (such as consumer credit insurance, gap insurance, extended warranties and mechanical breakdown insurance, tyre and rim, vinyl or paint cover and other extras) which can be expensive and may offer little value.
ASIC’s MoneySmart Cars app is available now on the App Store and Google Play. We have produced a series of videos for use on social media, featuring V8 SuperCar driver Craig Lowndes, who introduces some of the key features below.
For more advice and financial tips on car loans and car insurance visit ASIC’s MoneySmart website.
Greg Medcraft is Chairman of Australian Securities and Investments Commission