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Financial Tips

Managing Your Credit Card

 

Check these credit card management tips.

 

Do:

Ask yourself am I using this credit card for convenience or necessity? Consider using EFTPOS where possible (withdraw additional cash at the same time to save on ATM fees)

  • Pay off your card balances each month
  • Look for competitive credit card interest rates
  • Keep a record of any telephone or Internet credit card transactions and keep receipts until the statement comes in
  • Be aware of your credit limit, consider a personal loan if you are carrying a balance regularly

 

Don't:

  • Be tempted to sign up for a card purely on the basis of the loyalty or rewards scheme
  • Use your credit card if your balance is looking a bit overweight
  • Be tempted to increase your credit limit and thus continue to build greater debts
  • Make too many cash withdrawals from a credit card as charges may be higher for these direct transactions

 

Download our fact sheet on Managing your Credit Card.

 

Buying a Car

 

Cars can bring mobility, freedom and pleasure. It is important to consider all your options before taking the plunge. Here are some tips to help you when purchasing a car from new or used, insurance and finance options.

 

Different ways to buy

You can buy a car by

  • Paying for it with your savings
  • Taking out a personal loan to cover all or part of the cost
  • Borrowing the money from the seller (this 'dealer finance' is usually provided by an outside financial institution)
  • Private leasing

 

Arrange your finance first

If you need a loan to purchase the car, it's best to organise this first before you pick a car you can't afford or rush into a car finance offer. Make sure you have the bargaining power of pre-approved finance when searching for your 'dream vehicle'.

 

To find out about a Car Loan click here.

 

Checklist for selecting the right car

  • Will it seat enough people and carry a big enough load?
  • Does it have sufficient power?
  • Will it do all the jobs required?
  • Can I afford to run and maintain it?
  • Is comprehensive insurance for this model affordable?
  • Will this model hold its value?
  • Is it going to be reliable?
  • Is it safe and environmentally responsible?
  • Am I going to enjoy owning it?
  • Lastly and most importantly, am I letting my heart rule my head?

 

Examine the whole picture

When buying a car, it is important to look at the whole financial equation, because the purchase price does not represent the entire cost of a car. There's a range of other bills that you can expect either immediately or soon after your purchase.

 

Whether you buy new or second-hand, you will encounter government charges. State governments levy stamp duty and either a registration fee or a transfer fee if the vehicle is already registered.

 

With new cars, there has been a trend towards 'drive-away' prices but many advertisements still put 'dealer preparation charges' in small print. The message here is simple: work out all the charges and make sure they fit into your total budget. A checklist is provided on the next page to help you calculate the real cost.

 

There's also compulsory third party personal insurance to organise and you'll need insurance too.

 

In certain cases, such as when a car is registered in the name of a business, fringe benefits tax may be payable. For information on this, speak to the Australian Taxation Office or your accountant.

 

What's it worth?

How do you know what the car you are buying is really worth? Simple - do your homework. There are various car magazines, motoring associations and website which will provide a guide to average used car prices.

 

Buying privately

Buying privately is generally cheaper but it means going without a warranty unless the car is still covered by a transferable new car warranty. You can't compare a range of cars side-by-side (except at a car market) and buying privately often means trudging all over the city to see cars which don't live up to the expectations raised by the advertisements.

 

If buying at a 'car market' - which brings together a group of buyers and private sellers - you must treat the purchase in the same way as a private sale and do all the usual checks. At a market you can do some comparative shopping, and can often do more bargaining.

 

Double-checking

The majority of people are honest and decent, but you must still double-check everything you are told. If a car is described as a 1990 model, for example, and the paperwork doesn't confirm this, it could have a significant influence on the vehicle's value. Also examine the logbooks or service records to confirm the car has been regularly and properly serviced throughout its ownership.

 

Used car dealers

If you buy from a used car dealership, it pays to go to a professional, service-oriented establishment which offers a good selection of stock and has a well set-up workshop to perform any repairs which may be required during the course of the warranty. Some car dealers provide NRMA reports. If so, ensure that it is up to date, and then study it carefully to ensure that you understand the condition of the car you wish to purchase.

 

Auctions

Unless you're feeling very brave or lucky, it's best to leave auctions to the pros. They involve a greater risk, since cars are sold 'as is' and it's usually not possible to perform a thorough mechanical inspection beforehand. Another trap for new players is that the purchasing decision has to be made quickly, which is rarely the best way to make it.

 

Legal ownership

Is the car encumbered, which is to say:

  • Does the car truly and fully belong to the person selling it?
  • Is it still the subject of a financing arrangement?
  • Has it been used as security on a loan which has not been discharged?
  • If so, it can be repossessed, even though you have bought it in good faith?

 

The place to check is the Personal Property Security Register (PPSR). The PPSR is a national database that stores details of security interests registered against personal property. To find out more, visit the PPSR website here.

 

Different types of insurance

There are four basic types of automotive insurance.
 

Comprehensive
This covers the damage caused to your vehicle during an accident and any damage your vehicle may cause to other cars or property. Many policies include additional benefits such as a rental car while yours is off the road. Driving a car which does not have comprehensive insurance is putting yourself at great financial risk.

Third Party Property
This covers the damage you might cause to other vehicles or property in an accident. Damage to your own vehicle, however, is not included. It's better than nothing but still leaves you exposed to losing the entire value of your car.

 

Third Party, Fire and Theft
A more expensive version of third party property insurance, this will cover your car if it is stolen or damaged by fire, but not if it is involved in an accident.

Third Party Personal
This is also known as compulsory third party (CTP). It is obligatory in all states, though there are different methods of paying for it.

Third party personal insurance covers the injuries sustained by victims of an accident. It does not cover property damage and, technically speaking, doesn't cover a driver who is 'at-fault'. However, many companies now offer CTP policies which include 'at-fault' drivers. These are well worth considering.

 

Arrange Your Insurance Before You Pick Up Your Car

Protect yourself and your new asset - make sure it's insured before you take it home. 

 

Download our fact sheet on Buying a Car.

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