The moment you buy a new car – the value of that car drops. That means you could have literally sat in a $40K car just once and as a result, it is now worth $38K – a loss of $2000 as quick as Hugh Jackman on a flying fox.

Why do people buy new cars?

They think they are more reliable. They think that they will last longer. Well sadly, both of those reasons are nothing more than myths.

Reliability can be assured in the sale of a second hand vehicle by simply buying from a reputable dealer. Odds are the car will come with a warranty and inspections that guarantee the car to be of a high quality.

As for the car lasting longer, this is the laughing stock of the industry. The average car ownership time frame is less than 5 years, yet we all think our new pride and joy will be a forever purchase. I assure you it is not so stop thinking like that.

How can you buy a new car without paying a new car price?

Why not search the car classifieds for someone who has not taken this advice and is selling a brand new car for well below retail? I like the idea of someone else other than me doing their money on the car only to give it to me for below retail.

Alternatively you could look to buy demonstrator models – e.g. cars that have been driven around the block by the dealership when trying to make a sale. Chances are the car is in pristine condition, done only a few thousand kilometres and will come in well below the retail price. Once again, you have let someone else wear the costs.

Another tried and tested way of saving money is to look at reputable car yards by big manufactures – e.g. visit a Toyota dealership for the cars that others have traded in. The cars will be in sellable condition if they are on display and with a bit of bargaining, the price can also be lowered.

What Can You Afford?

A car requires a major expenditure of capital. Beyond the upfront cost of the wheels, you then have major costs associated with rego, insurance, roadside assistance, repairs, tolls and the ghoulish demon, petrol. You’ll need to fully investigate these costs, and be able to budget them into your lifestyle. For instance, will you be able to afford all of this upfront or will you need to borrow a loan to buy your vehicle? And, if that’s the case, what level of repayment can you comfortably absorb into your lifestyle, including the extraneous costs of actually running the thing. Second-hand cars are a fact of life for most of us, so mortgaging your next five years in order to get a brand-spanking new machine should not be a priority.

Choose A Loan

Generally, I’m fairly uncomfortable with personal loans but putting together the capital for a car can be nigh-on impossible so I understand their purpose. According to the MoneySmart website, loans are usually for a term of 12 months to 5 years and are usually fixed rate loans, so the repayment amount will not change over the term of the loan. Should you pay off the loan faster than anticipated you may be required to pay an early termination fee. If you don’t pay of the total amount by the end of the term, you will be required to either pay it as a lump sum or refinance.

Secured Versus Unsecured

Secured loans require an asset, usually the car you’ve bought. Should you default on your repayments, the lender is able to repossess the asset and sell it to regain the borrowed money, without going to court. Usually these are loans that are for newer cars. Remember that cars are a depreciating asset, so if your car resells for a lesser price, you will be required to pay the difference. Unsecured loans are loans without assets as security. Generally you can borrow less and the interest rate may be higher. More usually, these will be for second-hand vehicles.

Other Finance

There are other ways of financing a vehicle. Some dealers can offer finance, though MoneySmart suggests often other lenders will organise better rates for your loan. Research will be key to saving you money here, as it often is. Leasing a car is exactly that- you lease a car for an agreed period of time. Once that time elapses, the car is sold. You can make an offer, but often the car will be sold elsewhere so don’t invest in this unless you have a desire not to own a car in 1, 3 or 5 years time and the lease is convenient.

As one friend said, “Cars. They break your heart”. They also have the tendency to break your bank account. Here are some of the bigger money pitfalls in dealing with the dealings of our four-wheeled friends, and how to avoid them. Thanks to MSN Money for inspiration.

Premium, not regular petrol

Giving your car ‘presents’, like nicer petrol, is a bit odd. Let’s be honest- they can’t hear you, and they’re not going to run nicely because you’ve been so sweet. If you’re driving a car from pre-1992, steer clear of ethanol petrol because that’ll kill it faster than a fly swatter on a lazy fly. If not, premium is a money drain that you can ill-afford.

Getting Stingy

Sometimes we get stingy at the worst moments- we ignore the manufacturer’s suggested oil change timetable, or avoid changing the timing belt. Then the car breaks and we have to spend a fortune fixing the rotten thing. Avoiding this is easy- follow the instructions, and spend money when required. That said, don’t believe the dealer when he suggests you get a major service every thirty seconds which, of course, he will provide.

Services at the Dealer

Independent shops will generally do cheaper, more efficient service than the major dealers. Take your owner manual and see how it goes. This is an important relationship, so spend some time asking around. Word of mouth is the best bet and once you’ve found your man, never let him go. If you’re getting repairs, before you pay for the job, have a look at the work or drive the car around for a bit to check it truly is fixed.

Paying To Have Wiper Blades Changed

Once a year, buy a new wiper blade and fit it yourself. Get DIY and don’t believe people who try and convince you that it’s a job to pay someone for. It’s a pretty self-evident process and getting someone else to do it for you is a waste of money. The same goes with air filters. It’s a five minute job. If you’re living in a dusty climate, it is advised you change it with every oil change. If not, then every 30, 000 kms should do the trick.

Losing Records

Keeping a record of all the repairs done to your car will not only help you to decide if something is a serious problem, it’s also great if you decide to sell it on. Having a comprehensive list of repairs is a great bonus should you want to move the car along. Records will also help should there be any warranty on the repairs.

Giving Up

Nothing drives me more crazy than companies who make it difficult to claim warranty so people have to give up. I know it takes a lot of time (that none of us have) but it’s a deliberate policy on their behalf to save money. So save your money, not their multi-billion dollar bottom line, and fight for your warranty. There’s no need to be unreasonable, but stand firm on what your contract of sale says and if they’re being a pain, call a consumer watchdog for advice,

How to drive

Sounds plain and simple and you would hope a basic level of competence exists for all drivers, but I’m sure we’ve all been behind the wheel at times thinking “where on earth did that guy/gal get her licence?” For nearly 15 years my mother could not for the life of her reverse parallel park. I remember as a child in the backseat of the wagon hearing horns blaring as she spent 15 minutes trying to get her tail end into a car park.

There are advanced driver training courses held in each state as well as lessons available from private companies. The cheapest option however is to go back to basics, take the car out to a quiet street or car park and practice. Just 30 minutes a week of practice could avoid an accident in future. So if you’re hearing more horns than Brisbane wharf at 6am, then maybe it’s time to brush up your skills?

Understanding how to drive properly will result in less tickets, less anger when driving and result in a more economical car for you and your family.

The whatsa-ma-callit next to the thing-me-bob is making a thud noise

Ever had a mechanic look at your strangely whilst you try to describe what’s going on with your car? Ever been charged $200 for head light fluid? You might as well have the word ‘sucker’ tattooed on your forehead. I’m not saying you should know exactly how your car functions, but a basic understanding of what parts are called and what they do certainly helps when something goes wrong.

Read your car manual if you have one, or speak to an educated friend who can explain a few basic things under the hood. Your local library should have a range of books on cars and maintenance. Knowing where the oil goes and why it’s important will come in handy in the next part.

Basic home maintenance

If you lack upper body strength like myself, then changing the oil in your car is probably not an option for you because those oil filters are often on tight! Knowing how to check your oil though and top it up when it’s low is essential to keeping your car running. Take a trip to your local Autobarn/Supercheap and compare prices for your car’s grade of oil.

Quite often around father’s day the stores have a sale and this is a great time to stock up.

Can you locate the air filter? This is easily replaceable; just make sure you get the right size for your vehicle. Check the overflow level for the radiator, are you coming into winter? Will it need anti-freeze instead of just coolant? Always make sure you have a supply of this in the garage/shed and check levels regularly. The cost of $10 worth of coolant once every 6 months is far cheaper than a cracked head/ blown gasket/new radiator which start from $500.

Lastly if you are going through more than 1 litre of oil a month, it’s time to question why, this means a trip to the mechanic.

Standing your ground

If your car is leaking oil/ radiator fluid/ transmission fluid your mechanic will investigate why. It might be as simple as replacing a seal or as complicated as replacing a pump.

Before you authorise any repair to be carried out, ask specifically what is wrong with your car. It may be the case that a re-conditioned part will do the job and if that is the case, get the mechanic to ring around for you. Quite often they will get a better deal than someone from the public, so before they do the work on the car, get them to do leg work in getting you the best deal. It is also important at this point to get an estimate of the total cost based on the repairs they have said are necessary.

I used to think my local mechanic was looking after me by checking spark plugs, rotating my tyres and replacing brake pads until I realised I was paying for all of it when all I went in for was an oil change. You are only authorising them to perform the work they have advised is necessary and therefore this is all you are required to pay for, any little extras should be at their cost not yours.

How much is it really costing you?

You’ve bought an older car, because it was only $2,000 and you didn’t have any more money to spend. It’s a good start because the last thing you want to do is get into debt, but how much is an older car costing you in comparison to a newer model? Is it leaded fuel and you’re spending an extra $10 in additive each time you fill up? Is it economical, or are you only getting 300km to a tank and therefore have to fill up more often?

Are you taking it in to the mechanics every second week to get something else replaced? It could work out that buying a $5,000 car could save you more in the long run even with a small personal loan. So shop around, get your potential vehicle inspected by a registered mechanic or NRMA inspector and do your research, www.redbook.com.au gives an anticipated value on second hand cars and has statistics on fuel consumption.

That said, before I join the throng of Kerouacs and Hunter S. Thompsons wannabes on the road, maybe I should think about my finances. After all my dark thoughts about the cost of public transport, the thought of the expenditure on a car is frightening.

This was all inspired by an article on the benefits of car-free living by Orien Kriegman on Alternet. The article centred on intangible benefits, as well as the ones you can feel in your pockets. So, what reasons are there for not having a car?

Peace of mind

Sure, the late night train home is generally unpleasant. There’s always that bunch of teenagers, where taste in music has an inverse relationship to the decibel level with which it is played. The seats are uncomfortable, and you can’t adjust the heat levels.

You also never have to push a broken-down car off the road, apologise to other people when you’ve pranged their car, sit in Parramatta Road traffic or visit your mechanic three times before the problem in the gear box can be fixed.

You’re the best person to judge the price of that kind of peace of mind. Some people might say it was priceless.

Eco or Ego

In this age of eco-conciousness, it continues to amaze me that people still buy such unfriendly vehicles. With the variety of great cars out there that have high fuel efficiency or are at least a little bit friendlier towards the environment, all I can put it down to is ego winning out over the eco. Sure, cars are stereotypically status symbols. But to whom? Would I be more impressed with someone if I knew they drove a Mercedes? Probably not.

I would be impressed if someone caught the train to work because they were worried about the environment. The beauty of it is that you are saving a lot of money on fuel costs. The money spent on your train ticket would have been spent a hundred times over if you drove instead.

No slipping

The pesky things about cars is the upfront cost might seem low, but the fees that come with it add up. The wonderful thing about living a public transport existence is that the costs are upfront and unlikely to change dramatically. They are never going to throw your entire budget off like a car might.

Think about the insurance premiums, green slips, parking and mechanical costs. You’ll save hundreds of dollars annually on those costs alone if you lead a car-free life. And your budget will be accurate and unlikely to blow out. A car is a wonderful and helpful machine, but it’s not a savings device. If savings are the name of the game for you right now, think about getting around in a two-legged fashion for a whole.

How much do you think you save living without a car? Is having a car worth the cost?

There are a few things you can do to minimise the ongoing costs of your car.

Car pooling to save money

Car pooling is becoming more fashionable and popular as petrol prices remain high and Aussie cities remain choked with rush-hour traffic. Most people car pool with colleagues or friends who work in their vicinity. If you can find someone at your work who lives near you and is willing to car pool you can literally halve the weekly cost of your petrol. Since you’ll be driving your car less you’ll also increase the time between services and reduce general maintained costs.

If you don’t have any acquaintances who are interested in car pooling, try a website like Gum Tree.

Handwash your car to save money – not pay for it

A full commercial car wash can set you back about $$$$$, a cost that adds up if you wash your car every fortnight or even every month. Compare that to the cost of a soapy bucket of water, a sponge and a little elbow grease and the maths does itself.

Service your car cheaply and regularly to save money

You shouldn’t neglect your car and the better condition you keep it in, the more value will be sustained in the vehicle. Service your vehicle promptly when it’s due and keep the log book in good order. This will also add value to the vehicle if you decide to sell and lessen the risk of serious wear and tear.

Know when to sell your car and what car to buy

Keep your eye on the market and know how much your car would be worth if you elected to sell it. If it looks like the value of your car is going to plummet, try and sell the vehicle and replace it with a model which will hold its value. This way you avoid losing thousands of dollars each time you buy a new car.

As much as possible, pay particular attention to the fuel efficiency of a vehicle and take that into account when deciding what car to buy. You should also consider how a model holds its value.

Have comprehensive insurance

This is a good example of where it pays in the long term to spend a bit up front. Accidents happen all the time and unless you have money to burn, the last thing you want to worry about after a serious prang is financing a new car. The most important thing is to research different policies and make sure you buy one which suits you and your budget.

Then there’s the matter of actually parking. Having successfully achieved my full license having made only one reverse park in my life (that of the actual driving test), some spots prove too much for my parallel abilities. On top of that, I seem to have some kind of spatial awareness problem, resulting in scratches, dents and many tears in several different carparks.

If that wasn’t enough, they want to make you pay for the privilege of this horrible experience. If it were a couple of dollars here and there, I could overlook the insult but parking fees (and fines when I choose to ignore the fees) end up a huge amount of money, especially if you need to park for several hours.

So how can you save money on parking?

Don’t drive

That’s right people. I thought I should start with the obvious. Parking in the city is a nightmare, so why not hitch a ride on a bus or a train and pay $2, not $25? If needs be, you can drive from your house and leave the car at a transport hub and save yourself money that way.

Embrace your own two feet

I’ve been known to walk a long way to avoid paying for parking. Such Meccas do exist, and you would do well to investigate where they can be found. Sure it takes you a bit longer, but a little bit of walking can’t hurt and you’ll save yourself a couple of dollars every day, so your wallet can stop hurting too.

Know your freebies

Lots of car parks have special deals- say, the first three hours are free. Use these whenever you can. You can only use them once a day (so, the driving around the block and reentering routine may not work so well) but it’ll save you a lot of money, especially if you can manage to get your business down in under three hours and then hightail it without having to spend a cent.

Check student rates

This won’t work for all of us, but if you’re a student, chances are the carpark near to your university will offer you a discount on all-day parking.

For Sydney University students, parking at Broadway is $10 for an entire day, which is ridiculously cheap in the current climate. Asking for students discounts is always a money saver, as it is sure to pay off at some point.

Move it

If you’ve got a 1hr parking spot for free, then don’t leave the car there for several hours. Some days you get lucky, and no one books you, but the cost of a parking fine is huge and will add up over the years. Move the car within the allotted time and you’ll end up saving a fair amount of money.

Try and avoid the temptation of alluring bus stops and ‘no stopping’ signs- they are there to tease you, and you might as well accept that.

How do you save money on parking?

Do you find it to be an expense that can be eliminated?

Now we say hello to car pooling, the concept of sharing a car to work with a colleague or co-worker in the hope of reducing the above associated costs.

So why car pool?

1. If you car pool with just one other person, you effectively cut your operating costs in half.
2. You are lowering you emissions and doing your part for the environment.
3. You can use the T2 (transit lane for 2+ people) potentially saving a lot of time on the way to work.
4. You can discuss business on the way to work, or allow the passenger to catch up on the dreaded emails.
5. Driving to and from work can get boring – wake these boring sessions up with a bit of chit chat and discussion about your week ahead.

How much money will it save you?

To figure out how much money this would save you – add up the cost of petrol, the cost of parking and amount of usage your car gets on a 5 day week. Divide this by two and that is what it leaves you.

For instance, I personally drive to work and pay $65 a week in petrol, $15 a day parking and use my car for 5 days all while polluting the Sydney highway with emissions. Having a person to car pool with will save me $70 per week in petrol and parking and also limit the usage on my car, thus keeping the KM’s down and the overall depreciation to half of what it normally would be – all while doing my thing for the environment! Who says saving money can’t be easy?

Potential issues with car pooling

Although the money saving benefits greatly outweigh the negatives, you must remember that by car pooling you are taking on a number of new responsibilities.

By sharing a car you will have to think about what times you wish to arrive and leave your office or location, as these times may differ from your co-worker or colleague.

You will also have to think about whether or not you enjoy your personal time to and from work, and whether you are driving in the first place because you do not like having crowded company that you may find on a train or in a car with another passenger.

Do you car pool?

Tell us how you save money on the way to and from work, have you had any nightmare experiences with car pooling that we should be aware of?

Cost of running a car

A reader of this site, Kimberly, recently informed me that the average cost of running a small car per year is $8000 (Source: RACV). That means the cost of running a car is nearly ten thousand dollars for 12months! Imagine if you could reclaim even $5000 of that by using public transport for 2-3 days a week when commuting to work? Surely that would be worth it! $5000 Invested into a high interest bank account would turn into nearly $6000 by just sitting there over the course of 12months.

Some of the costs of running a car include:

• Tyres ($300+)
• Registration costs ($300+)
• CTP Greenslips ($300+)
  
• Petrol (around $60 per tank currently for a small Honda Civic 2001)
• Oil/Maintainance/+ More ($200+)
• Parking Costs

Save $75 per week using public transport

Whether you are in Sydney or Melbourne or any other state in Australia, we have some of the worlds best public transport infrastructures, though we may not believe it!

For Sydney Siders, the cost of catching a train to the city and back from within the metro region is about $40 for an adult per week, very similar to that of Melbourne prices.

Buy a weekly ticket on Monday morning and use the return ticket for one week back and forwards and you will easily save $75 on petrol, parking and other associated costs. Very easy way to save money really, so I suggest you calculate your year on year savings and start smiling at how much money you will be saving.

Why use public transport to save?

• Minimise petrol use.
• Cut down on parking costs.
• It tends to be faster then driving and traffic.
• You can sell you car, the largest depreciating asset you own!
• Helps cut down green house gases for us enviro happy people!

Fairfax (The Age and SMH) recently did an article called ‘The Great Public Transport Challenge’ in which 4 commuters tested the fastest way to get to work in the CBD using different transport methods. Turns out buses and trains and bikes are the best way to get to work!

Further Reading

• The Age – Great Transport Challenge

Saving money on petrol has become the nations new obsession in Australia.

The key thing we need to look at with saving petrol and saving money on petrol, is ‘How can we make a difference?’ and start to minimise our fuel consumption.

In order to identify where you are using up most of your petrol while driving, I am going to list the top ways as stated by Wheels Magazine that people waste petrol and how they can minimise that petrol consumption.

Petrol Saving Tips

1. The worst way to consume lots of petrol, is by having a lead foot. It is suggested that you slow down, avoid fast acceleration and remember that even if you drive faster to get from a to b, it still does not get you there quicker, as proven by Wheels Mag Aug 08.
2. Using toll roads to cut time in traffic. This technique was proven to not save much money or petrol, as most tolls cost over $3.20 in Sydney while 10km of petrol costs $1.60, meaning effectively the toll is the same as driving 20kms – you do the math, unless its bumper to bumper traffic, avoid the tolls.
3. Turn your engine off. This is considered absolutely a waste of petrol. In the past people thought it helped save petrol and running costs, when in fact stopping and starting a car are when the vehicle uses its maximum petrol. Only turn the engine off if you are in gridlocked traffic for hours.
4. Ensure your tyre pressure is correct. A deflated tyre, even by a couple of PSI can amount to a 5% loss in fuel and severe safety under-performance by your car. Check your tyres fortnightly to ensure maximum PSI is always in effect.
5. Use cruise control. When doing long trips, set the control function – it stops you unnecessarily accelerating and using petrol that is effectively useless on the open road. This can save around 5% of your petrol in just 30mins of cruising.
6. Get to a higher gear in manual cars as quick as possible. This reduces engine use and petrol consumption by moving the car in a more economical gear. Bit hard to stay at 90KM/h in Sydney though!
7. Put the windows down. Leave the air conditioning off. This does not make a HUGE difference but can help save between 4-5% of petrol in your tank.

Best way to save money on fuel/petrol?

Now for the final answer on how to save money on petrol, this answer has been proven by Wheels Magazine, tested by myself (Alex Wilson) and has also resulted in cutting my fuel bill down by around 55%.

What is it you ask? Simple.

Do not travel in peak hours on the road. Avoid peak hour. Peak hour and grid lock traffic can result in using 1/4 of your tank for each hour you spend in bumper to bumper traffic.

So, how do I avoid peak hour traffic? I leave for work an hour earlier each day, I catch the train as much as I can and I also try and leave work a little bit later so I can get all my work done, catch up on my emails and avoid the rush.

Question on Petrol Saving

How do you save money on petrol? I would love everyone to share how it is they personally save money on petrol.