Advice request: Buying a car

Maelin

So I'm looking at buying a car. At the moment I am using my parents' old car, however when I move out of home I will not be able to take it with me, and it also lacks some of the features I would like (cruise control in particular).

I'm looking at buying a small car, probably a hatchback. At the moment I have saved around AU$12,000. My parents are willing to lend me some amount, probably up to $5000, and I work for a bank which can give me a loan at a very favourable staff rate. I earn a bit over $325 per week at the moment and I have few living expenses beyond luxuries, that income is bolstered semifrequently when I can work extra shifts. At the beginning of 2013 I will be seeking a full time job as a high school teacher.

Looking at a few car websites (in particular carsales.com.au) it appears I can buy a fairly good second hand car for around $15,000, or a brand new car that seems quite good for around $24,000. This is a very rough guide to local prices.

I am aware that my decision process in this judgement is very fallible because I don't know much about buying cars, e.g. the potential pitfalls of a second hand one, and any other things I need to take into account.

Being as this is by far the most money I will ever have spent on a single thing and it is likely to last me for most of a decade at least, I am strongly motivated to make this decision rationally.

Does anybody have any advice they can give on how I can decide how much money to spend, or things I should consider when comparing potential cars?

Being as this is by far the most money I will ever have spent on a single thing and it is likely to last me for most of a decade at least, I am strongly motivated to make this decision rationally.

Does anybody have any advice they can give on how I can decide how much money to spend, or things I should consider when comparing potential cars?

I agree with Morendil's points. A few bits and pieces I've picked up about the purchase price:

Some dealership tactics: find out who advertises the cheapest price on your wanted model, then call up everyone else who has it. Chances are somebody will try and compete on the price, the dealers will shift a fair bit. usually upgrades are a poor investment, and might sometimes be used by dealers to try and cloud comparisons between other dealers. don't fall for it.

In Australia, I've found the "dealership test cars" are usually good value. You get pretty much all the guarantees of a new car but with some of the "shiny and not broken" new car premium taken off. I've seen at least one instance of an 11% discount on an otherwise perfect condition car.

As a new car buyer who doesn't know much about second hand cars, you would do really well to find something with some manufactures warranty left, ensuring most severe problems will not be a hindrance.

REALLY consider depreciation. Whatever your buying, see what an older model costs relative to the one your buying. This is usually a good gauge of future depreciation values (in my opinion, commodores and falcons have pretty good residual value simply because there's so much information available about past prices ad reliability in oz, being an oldish car)

if going second hand, see the car first inspect everything like hawk ensure you have comparable prices to know your not being shafted.

WARNING ANECDOTAL : I've seen a few guys in your situation go for oldish Mercedes and BMW models, it usually ends badly because of the maintenance costs despite whatever joy you get from the badge. You will be several times better off with a spanking near new corrolla.