Sometimes it pays to think whether you really do need to buy that car ...
Toni is 19, has just entered the work force, is independent, a great saver and hardworking and is considering whether or not to buy her first car.
She is also planning to head to the UK to catch up with extended family within 18 months and will be away indefinitely.
"Buying a car isn't about long-term ownership, it's more about providing the independence I like," says Toni.
At the moment she is using public transport plus relying on family and friends for a drop off and pickup as needed. To make things a little more challenging, Toni is around 1.85cm in height and has found small cars in her price range very uncomfortable and hard to enter and exit. The budget: $4500
First let's look at the costs and negatives associated with vehicle ownership as the first step.
Initial outlay: This means withdrawing a big portion of that hard-earned money from your bank account which could be earning you interest.
Granted it won't be much at the present rates, but you have a guarantee it will be more than what you started with.
Depreciation: Unless you can pick up an absolute bargain, the reality is you will have to accept the fact that prices will have dropped come resale time. Add one more year to the car's life, one extra owner, plus a few extra kilometres and the values soon fall away.
Daihatsu Sirion SX.
Buying: You are buying into a price bracket that is reasonably high risk. While a vehicle can have a good past service history, it doesn't make it bulletproof and present owners may be quitting before they have to face big spending on future recommended work.
Running costs: It's almost impossible to calculate the exact running costs for an older and cheaper motor vehicle as there is always the possibility of having that surprise and unexpected large mechanical expense to deal with. Most repair outlets are charging a minimum of around $80 an hour these days but if it's a franchise dealer in the bigger towns it could be over $100 an hour plus GST. For the known costs such as insurance, registration, warrant of fitness, fuel, routine service, tyres and allowing for depreciation and loss of interest on the initial outlay, the costs per kilometre would be around 55 cents. With all the fixed costs associated with vehicle ownership, running costs don't change that much either if you travel less than the national average of around 14K.
So you can wave goodbye to at least $3500 a year as a minimum, and hope there are no unpleasant surprises along the way.
Selling: If you think buying is hard work then wait until it comes time to sell. It's unlikely you will be able to sell the vehicle to a used-vehicle dealer, so it's the private buyer that will be your target audience.
Toyota's good name means there will be some resale value in a vehicle such as the Echo hatchback.
The perfect scenario for you is to hand over the keys and collect the money a couple of days before you fly out of the country to start the OE, but that's highly unlikely to happen. The sale process needs to start around six weeks before departure.
The more desperate you get to sell, the more the price will have to be lowered and you can guarantee potential buyers are going to try to negotiate an even lower price. If you did get lucky and found a dealer to take the vehicle off your hands, the price offered would be a lot less than you imagined.
Dealers need to factor in a profit margin, and allow for any reconditioning costs.
Don't forget also that any money spent on a vehicle during ownership doesn't make it worth any more when it comes time to sell. At best, it makes it better than a comparable vehicle in a similar price range and, therefore, easier to sell for the asking price.
I think you need to look seriously at whether you actually do need to own your own vehicle at this point in your life.
A year will fly by and the slight inconvenience that you may suffer from using public transport and relying on family and friends will be insignificant when you look back. Think of what that extra money will enable you to do once you have headed overseas. If you still think you need a vehicle, then stick to the trusted brands in your price range, such as Toyota (Echo/Vitz), Nissan (Micra/March), Honda (HRV/Civic), Daihatsu (Sirion), Mazda (Demio) and Hyundai (Getz/Elantra).
As far as finding a vehicle with that extra room and ease of entry and exit, be a little careful.
There are some strange-looking used imports out there which are no doubt very practical but may have a limited amount of street appeal when it comes time to sell.