Looking for your first car? Your checklist for choosing your first car

Safety

When choosing your first car (or even second or third), prioritising safety is essential irrespective of the type of car you plan to buy. A good place to start looking into the reliability and safety of the cars you want to buy is comparing the ANCAP safety ratings of various cars. 

The Australasian New Car Assessment Program, or ANCAP, is a car safety assessment programme that crash-tests various cars and awards them ratings between one to five stars. These ratings tell you a lot about the level of safety provided by different car models.

You can visit the ANCAP website to compare the safety ratings of different types of cars or check the ratings of specific cars once you have a shortlist. The higher the rating, the safer the car. Once on the ANCAP website, select a car type, and you'll see a list of vehicles with their safety rating and fuel type. 

However, remember that ANCAP regularly updates its safety criteria, so it’s smart to also check when the car’s rating is from. ANCAP ratings are valid for up to six years; however, you may want to choose a car with a safety rating that is more recent rather than six years old. 

New vs used cars

When shopping for your first car, you may wonder whether you should choose a used car or get a brand-new car. Buying a brand-new car is undoubtedly an exciting prospect and comes with several advantages, like warranties and access to the latest features and technology. However, you're likely to shell out more money for a brand-new car than purchasing a used car. 

A used car will typically cost less, but it also means you miss out on things like warranty and need to do more leg work to ensure you don’t buy a bomb. If you do opt for a used car, be sure to check the car's condition, kilometres driven, service history and financial status. You’ll want to ensure the car isn’t stolen, has no finance remaining on it, or that finance will be paid out by your purchase, and there are no other loans or debts on the car. 

Whichever option you choose, remember to compare the financing options, as used car loans can often cost more than new car loans. 

Transmission

Most people will have a preference when it comes to choosing between manual and automatic transmissions. As it’s your first car, you may still be learning and therefore choose an automatic transmission due to the ease of driving them. However, you might prefer to choose a manual because you are then able to drive both if you ever need to. 

Size

When you're looking for a new car, make sure to consider why you want or need the car, as this will help you better understand the size of car you should look for. You’ll want to ensure you get the right-sized car for your and your family’s needs. 

If you're typically going to drive alone or with one or two passengers, a compact hatchback car may be an affordable and practical choice, particularly for city driving. However, if you're looking for a spacious car with ample room for you and your family, you may want to consider a sedan or SUV. A station wagon offers even more room for passengers and storage, making them ideal for family outings. 

Fuel type

The Australian car market has diversified over the years, especially when it comes to the fuel required for vehicles. There are now multiple options in the market, from the traditional petrol or diesel and the new additions of full or hybrid electric vehicles (EV). When deciding on the fuel type, you’ll also want to consider fuel efficiency, as this will be part of the ongoing costs of running the car.

EVs run solely on electricity and could significantly lower your fuel costs and carbon footprint. However, some EVs may come with higher upfront costs compared to fuel-based cars with comparable features. Given you’re shopping for your first car, affordability is likely to be a crucial factor, and it's essential to assess both the initial purchase price and ongoing costs before deciding on a vehicle. 

It's also worth comparing your financing options before deciding for or against an EV, as various products on the market, including green loans, may offer discounts to borrowers purchasing eco-friendly EVs and hybrid vehicles. 

Affordability

One of the most crucial factors when shopping for a car, particularly a first car, is the price of the vehicle. Depending on your financial situation, you may have enough cash to buy a car without taking out a loan. Or you may be planning to take out a car loan to help you pay for the purchase. 

While it's easier to fix a budget for the purchase when you're paying upfront, it's equally important to plan your finances if you're applying for a car loan to finance your purchase. You don’t want to overextend yourself and end up in a tricky financial situation.

When you apply for a car loan, the lender will consider various factors, including your income and credit score, to decide how much they feel confident lending you. Use a borrowing capacity calculator to get an estimate or an idea of how much lenders may be willing to lend you to purchase a car. 

However, you also need to remember the other costs of buying a car, apart from the purchase price. Your loan may cover the purchase amount, but you’ll also need to pay for registration and, at minimum, third-party insurance. You may also consider taking out a higher level of car insurance, and you’ll need to factor these ongoing costs into your budget as well as any repayments and possible costs of upkeep or repairs.

The actual amount you'll pay for a car also depends on the interest rate you secure on your car loan. The interest rate on secured car loans is cheaper than on unsecured car loans. This is down to the lender using the vehicle as collateral when you take out a secured loan. It means the lender could repossess your car and sell it if you can't keep up with your repayments. 

The type of car you purchase could also impact the total cost of the loan to you. While a used car may be cheaper to buy than a new car, the interest rate on used car loans may be higher than on new car loans. 

Remember to compare your options and be realistic about your financial situation. Having a budget will help you narrow down your options and ensure you choose a car that suits your financial situation and your personal needs or lifestyle.