With the Consumer Price Index (CPI) at a 40-year high, cars have never been less affordable. There are currently fewer cars being produced, and demand is driving the prices of existing vehicles at the dealer higher, too.
We recently published the Future Finance and Mobility Report, showing that Australians now expect the annual running cost of a vehicle to be over $15,000 - with petrol, parking and insurance costs all well up on last year. Eight consecutive cash rate rises from the RBA has also resulted in higher car repayments for those who are relying on car finance, and state governments are also expected to pay $227 more in fines this year - up to $986.
So, with all of this in mind, what should we consider when buying a car during a time of inflation? We’ve compiled our five top tips to help you keep a little more cash in your pocket if buying a car in 2023.
1. Know what you’re looking for
This one seems simple, but there are 100s of cars on the market today. Determine what you’re looking for before you get started, narrowing it down to a few makes and models that fit your budget and specific needs.
For example, if you have a family, you might be considering an SUV, or if you are mainly zipping around the city, a smaller, fuel-efficient hatchback. Once you’ve decided on the type of car, you can get down into the details.
2. Set a budget
Keeping in mind all of the costs associated with buying a car - including maintenance, fuel, registration, insurance and more - setting a budget can help avoid overspending. If you’re buying on finance, factor in your deposit and monthly payments.
A good rule of thumb is to allow around 15% of your income on car payments. For example, if you bring home $5000 a month, your budget should be about $750. Following this as a guide should help you avoid spending beyond your means in the long run.
3. Consider a used car
The used car market in Australia is finally starting to settle down after a few years of unusually high second-hand pricing and demand, so in some cases, purchasing a used vehicle can result in a little more cash in your pocket.
Still, it’s important to be careful when buying a used vehicle - be sure to do your research, know the car’s history, take the car for a test drive and get a full mechanical check before you buy.
4. Understand your running costs
Before you invest, understand the running costs of the cars that you’re considering. European makes, for example, will often offer a more comfortable and sleek driving experience, but expect to pay higher servicing and maintenance costs as a result.
Fuel efficiency is another consideration, as are insurance premiums for luxury cars if these are on your radar. It’s a great idea to check insurance costs, calculate what a tank of fuel will set you back, and understand service pricing structures for your new vehicle before you buy.
5. Try a car subscription
If committing to an outright or financed vehicle purchase is a little overwhelming right now, or just doesn’t suit your needs, we have some good news. Our carbar subscription offers the best of both worlds.
Similar to a lease, you can get into a new fully-maintained and comprehensively insured vehicle for a simple weekly subscription cost. This is one of the most flexible and easiest ways to get into a new or used car today.
There are minimum costs, but no minimum terms - unlike a lease. Just give two weeks’ notice and you can swap your car or stop your subscription at any time.
If you love your subscription car and want to own it down the line, you can also now purchase your beloved subscription car when it works for you.
Unlike any other car retailers in Australia, carbar customers can retain weekly payments and seamlessly switch their carbar subscription to a loan arrangement thanks to our latest partnership with car loan comparison platform, CarClarity.
You don’t even need to decide straight away. A car is a big purchase, so we allow our subscribers to switch to finance once they’re ready. Taking some time to try before you buy could save you a lot of money, time and hassle in the long run, especially in a time of inflation.
We’re adding new cars to our fleet every week – whether you choose to subscribe, finance or buy. The choice is always yours.
