Buying a car has financial traps

THIS month is the busiest time of the year for buying a new car and there are a few financial traps that can trip up people who are too eager.

money car

THIS month is the busiest time of the year for buying a new car and there are a few financial traps that can trip up people who are too eager.

Latest data from the Australian Bureau of Statistics show new vehicle sales for June in Australia are 30-60 per cent higher than other months.

Community CPS Australia manager of products and member value Brontie Chambers says it's important to be financially prepared and start with a pre-approved car loan.

"That way you have bargaining power when negotiating the final sale price," she says.

"If you are buying a car through a dealer, make sure you negotiate a drive-away price rather than just having a weekly payment plan.

"You may think that you're getting a great deal by bundling finance and paying a low weekly rate, but beware the repayment period may be longer than you think and in the end the total cost of the car could be far more than what you expect."

Buyers should not forget other expenses such as stamp duty and insurance.

"Its a good idea to get a quote for vehicle insurance before you buy the car so you know what your ongoing expenses will be," Chambers says.

"Keep in mind that it takes much more to keep a car running than simply paying off the loan.

"On average, the total cost of car ownership is about 1.5 times higher than the cost of paying off the loan."