Essential tips for buying a car: Your complete guide

In the market for a new car? From car insurance options to fuel types, safety features and beyond, keep these tips in mind to help you make the right choice. 

• Car insurance: What you need to know
• How your car choice impacts insurance costs
• Financing your car: What to keep in mind
• Buying a used car from a dealer or a private seller? 
• New versus used cars: Which is best for you?
• Vehicle history: Get a report 
• Demo and flood-damaged cars: Risks and rewards 
• Fuel types: Electric, petrol, or hybrid?
• Transmission choices: Automatic or manual?
• Inspections, test drives, and paperwork: Final steps 

Buying a car is an exciting milestone, but it can also feel a bit overwhelming. From choosing the fuel type to finding the best car insurance, there are many factors to consider. So, before you seal the deal on a purchase, it pays to learn a few tips to help you make an informed decision that fits your needs and budget – while avoiding costly mistakes along the way. 

Buying a car is one of the biggest financial commitments you’ll make, and for many, it’s second only to buying a home. That’s why it’s crucial to know what to look for when choosing your car, including factors like age, mileage, safety features, and of course, the right insurance. 

Car insurance: What you need to know 

Insurance isn’t just a box to tick when buying a car – it’s a critical factor that can significantly affect your long-term costs and financial peace of mind. Here’s the lowdown on the main types of car insurance, so you can pick the right one for your needs. 

• Third-party insurance: This is the most basic level of coverage. It covers damage you cause to other vehicles but leaves you responsible for your own car’s repairs. 

• Third-party, fire, and theft: Looking for a bit more protection? This option includes cover for fire damage and theft, making it a solid middle ground if you want more than basic third-party coverage. 

• Comprehensive insurance: For those seeking full protection, comprehensive insurance is the way to go. It covers damage to both your car and others, as well as theft, fire, and vandalism. It’s ideal for newer or higher-value cars, offering the peace of mind that comes with knowing you’re fully covered. 

To make things easier, MAS offers a range of motor vehicle insurance options, along with a handy guide to help you decide which option is best for you. 

How your car choice impacts insurance costs 

Do you know that the type of car you choose can impact how much you pay for insurance? Here are a few key factors to keep in mind. 

• Safety features: Cars with advanced safety tech like ABS, airbags and Electronic Stability Control (ESC), can come with lower insurance premiums. Insurers appreciate these features because they reduce the risk of severe accidents. 

• Theft risk: Some cars are more appealing to thieves, which can push your insurance premiums up. Opt for models with built-in anti-theft measures like immobilisers or tracking systems to help lower your rates. 

• Vehicle age and mileage: Older cars may come with higher premiums due to a greater likelihood of breakdowns and fewer modern safety features. But if you’re opting for a newer car, its higher value could also mean higher premiums. 

• New versus used: New cars often boast cutting-edge safety features, making them a safer (and sometimes cheaper) option to insure. On the flip side, a well-maintained used car might be more affordable to buy and insure. 

• Electric vs petrol: Electric vehicles (EVs) can come with higher insurance costs due to their high value and specialised repairs. Petrol vehicles can be cheaper to insure, but this typically depends on brand and model.   

Wondering how much you’ll be paying for insurance? MAS provides an easy online tool to estimate your costs based on these factors. If you want to delve even deeper, MAS also has a handy guide to the various aspects that affect the price of car insurance premiums.  

Financing your car: What to keep in mind 

How you finance your car purchase is just as important as the car itself. The first financial rule of car buying is that a car is not an investment. Your car is going to decline in value the longer you own it, so if you have savings, paying upfront is often the best option. It will save you from interest and the additional charges that come with taking out a loan for your car.  

If you are taking out a car loan, be mindful of how much you borrow. Cars depreciate in value quickly and taking out too large a loan could lead you into negative equity, where the car is worth less than the loan balance. One thing to remember, your KiwiSaver savings can’t be used to buy a car, as they’re generally reserved for retirement or first-home purchases. 

Buying a used car from a dealer or a private seller? 

There’s a big difference between buying a used car from a dealer or from a private seller via a website like TradeMe or AutoTrader. Car dealers attract car buyers who want greater legal protection than buying from a private seller. Car dealers are bound by the Consumer Guarantees Act to make sure the vehicles they sell are of acceptable quality. In addition, most dealers offer you the chance to purchase an additional warranty for a set period of time. One of the most popular warranties is against mechanical breakdown for the first 6 or 12 months you own the vehicle. If you're buying from a dealer, research their reputation through Google reviews or other online ratings. You can’t get this kind of reassurance when you buy from a private individual.  

Another reason to buy from a dealer is the chance to trade-in your old car. That means the dealer will give you a set amount of money for the car and deduct that from the purchase price of your new vehicle. While some people think they can get more money for their old car if they sell it privately, trade-ins are a popular option for many car buyers because it saves the hassle of selling your old car.     

New versus used cars: Which is best for you? 

Now that you’re ready to buy your car, the first big question is whether to go for a new or used car.  

• New cars: If the idea of owning the latest model with cutting-edge tech and a manufacturer’s warranty excites you, a new car is the way to go. You’ll get to enjoy advanced safety features, entertainment systems, and the ability to customise your ride. The downside? New cars are more expensive upfront and depreciate faster. 

• Used cars: On the flip side, used cars are generally much more affordable, and they depreciate at a slower rate. As long as you do your homework – checking the vehicle’s history and service records – you can find a great deal that provides years of reliable service. When looking at used cars, the age and mileage of the vehicle are critical factors. Cars with high mileage (generally over 150,000 km) may have significant wear and tear, though a full-service history can provide some reassurance. 

Vehicle history: Get a report 

For used cars, it’s advisable to get a vehicle history report. Services like MotorWeb can provide comprehensive information about past accidents, previous ownership, and any outstanding recalls. The report will also tell you if there is still any money owing on a car. This is vital information because in some cases a lender can repossess your new car if the previous owner hasn’t paid off their car loan. 

Demo and flood-damaged cars: Risks and rewards 

A demo car refers to a vehicle that has been used by the dealership for test drives or display purposes. These cars usually have low mileage and are sold at a discount, but they can come with more wear and tear than a brand-new vehicle. If you're wondering whether it's worth buying a demo car, consider the potential savings but also be mindful of additional wear and tear. 

Flood-damaged cars are generally not worth buying due to hidden issues like corrosion and electrical failures. In February 2023 alone, 524 vehicles were written off in New Zealand due to water damage. These vehicles can also be difficult and expensive to insure, making them a risky purchase. 

Fuel types: Electric, petrol, or hybrid? 

Fuel choice has become more important than ever, especially with environmental concerns growing and the cost of fuel increasing. Whether you go electric, petrol, or hybrid, each option has its pros and cons: 

• Electric vehicles (EVs): EVs are great for reducing emissions and can be cheaper to run over time. However, they tend to have a higher upfront cost and you may need to rely on a developing charging infrastructure depending on your situation. Electric and diesel vehicles must pay road user charges of between $38 and $76 per 1,000km. If you buy a petrol vehicle, charges are included in the price of petrol.   

• Petrol/diesel cars: These are still the most common options for car buyers in New Zealand. Petrol and diesel cars come with a wide variety of models, but they produce more emissions and can be expensive to maintain. 

• Hybrids: Hybrids can be seen as a balance between petrol and electric vehicles due to their lower fuel consumption, lower emissions and less reliance on charging stations. While they typically cost more upfront, the long-term savings and independence from the charging network make hybrids an attractive choice for many drivers. 

Transmission choices: Automatic or manual? 

Your transmission choice comes down to personal preference and driving style. 

• Automatic transmission: Perfect for city driving, where stop-and-go traffic is common. It’s easier to handle but may come with higher maintenance costs. 
• Manual transmission: Offers better fuel efficiency and control, though it can be tricky for new drivers to master. Many drivers still prefer manual vehicles for the control they offer, especially in challenging conditions. 

Inspections, test drives, and paperwork: Final steps 

Knowing how to check a car before buying can save you from unexpected issues down the road. A professional inspection can reveal any underlying issues, while a test drive will give you a feel for the car’s handling and comfort. The Government’s consumer protection website has some good tips, such as paying attention to any rattling, shaking, or unusual noises.  

Checklist for test drives 

• Visual inspection for signs of damage or rust. 

• Tyre check for adequate tread and even wear. 

• Electrical test for lights, indicators and electronics. 

• Check under the hood for fluid levels and leaks. 

And don’t forget the paperwork – ensure the car has a valid Warrant of Fitness (WoF), up-to-date registration, and a clean vehicle history.