Carefully consider your specific needs and the pros and cons of buying a car from different kinds of sellers.

Before you hit the car yards or get set on a specific make or model, make sure you understand what sort of vehicle will meet your needs and situation. A little preparation in advance will help you avoid issues later on.

Know your financial situation

Before you start viewing cars, ask yourself how much you are willing — and can comfortably afford — to pay. To do this, it helps to have a clear idea of how much money you have coming in and going out every week or month. Sorted’s budgeting tool can help.

Budgeting tool(external link) — Sorted

Remember, the ticket price and monthly payments aren’t the only costs of owning a car. Running costs include:

  • interest and fees to the lender if you buy on finance
  • warrant of fitness (WoF) fees
  • relicensing fees
  • fuel 
  • on road costs, such as Road User Charges (RUC) for diesel vehicles
  • regular servicing
  • maintenance and repairs
  • insurance
  • parking.

Most cars, especially new ones, go down in value a lot after you buy them. Buying a slightly older car can reduce your initial purchase costs and limit your losses if you sell it later.

Consider how finance works for you

In a perfect world, it’s best to save enough money first to buy your car outright. You would avoid the risk of unmanageable debt if your financial situation changes.

But most people need to borrow for a car. If you do, try to sort out financing before you buy one. It’s often much cheaper than getting a loan from a car dealer. Often with dealer arranged finance, you can’t decide to pay more than the set payments or pay off the loan early.

If you arrange finance with a bank or lending institution, you may be able to control how much and how quickly you pay off your loan. If your situation and the terms of the finance contract allow it, you should always try to pay more than the minimum monthly payments. You will save money on interest.

Shop around for the lowest interest rates available to you before you decide which lender to go with.

Use Sorted’s debt calculator to estimate the true cost of financing a car, including how much you will pay in fees and interest.

Debt calculator(external link) — Sorted


Read more on Getting a loan for your car


Understand which make or model will fit your needs

Look at different cars in your price range. Before you get set on a specific make or model, make sure it fits your needs. Ask yourself:

  • How often will you be driving the car?
  • What kinds of roads will you be driving on most often?
  • Will you be doing lots of city driving?
  • Will you be driving for long distances? If so, will diesel be more economical?
  • How often will you be carrying passengers?
  • Do you need to be able to tow?
  • Will anyone else be driving the car?

If you only need a 4x4 for a couple of weekends per year, it’s probably cheaper to buy a more economical car and rent a larger car whenever you need it.

Consider car safety ratings

Vehicles with high safety ratings are cheaper to register and insure. So while safer cars may come with a higher sticker price, it may save you money — and your wellbeing — in the long run. Safety features are particularly important if younger or less experienced drivers will be behind the wheel.

Some important safety features to look for are:

  • electronic stability control (ESC) to protect you if you lose control of your car
  • side curtain airbags to protect you and your passengers from the side in a crash.

You can find vehicle safety ratings and features on Rightcar’s website.

Car Safety Ratings(external link) — Rightcar

Understand fuel economy and emissions

Consider fuel consumption and emissions. Clean vehicles that use less fuel will save you money and help protect the environment.

You can find fuel economy, pollutants and emission ratings for certain makes and models on Rightcar.govt.nz(external link).

Other considerations

Other factors could include:

  • the car’s average resale value
  • the car’s depreciation rate over time
  • how easy it is to get spare parts for the car if something goes wrong.

You can find this information in car reviews, online forums and by asking experts for their advice.


Differences between a car dealer and a private sale

Common ways to buy a car in New Zealand are from a:

  • private seller, eg a car listed by a person on Trade Me, online forums, adverts and community notice boards
  • registered motor vehicle trader, ie a car dealer
  • car auction, where cars may be sold from both private sellers and car dealers
  • car fair, where cars may be sold from both private sellers and car dealers.

There may be reasons why you might choose to buy from a private seller. You may be able to negotiate a lower price from the seller. Also, dealerships usually have fewer older or low-cost vehicles available.

But it is safer to buy from a registered car dealer. Cars sold by dealers are covered by the Consumer Guarantees Act, Fair Trading Act and other consumer laws. Dealers are also required to display a Consumer Information Notice (CIN) on used cars. The CIN lists important details on the car, such as the:

  • vehicle history
  • cash price
  • make and model
  • any money still owing on the car from the previous owner.

These protections mean you have more options if there’s a problem after purchase.

Here’s a quick overview of which laws protect you if you buy from a private seller vs car dealer.

Legal RequirementsPrivate sellersCar dealers
Display Consumer Information Notice (CIN) on vehicle
Follow the Consumer Guarantees Act
Follow the Fair Trading Act
Follow the Contract and Commercial Law Act

In some limited situations, a seller can ask a buyer to waive their rights under the Contract and Commercial Act — but they must be clear about this request before they sell you the car.

No matter who you buy from, learn as much as possible about the seller beforehand. This might mean:

  • searching the web for any reviews on the car dealer
  • reading customer reviews on a car dealer’s social media pages
  • looking at a private seller’s Trade Me reviews and feedback score.

Read more about Buying a car privately


Read more about Buying a car from a dealer