[Female host, ABC]: Well apart from buying a house, buying a car is most likely one of your most expensive purchases depending on what car you buy, I guess but is it worth it? Depending on where you live public transport may actually be a better option. [Male host, ABC]: Well certainly be cheaper wouldn’t it? And then they’re also the ride-sharing services available, with the prospect that in the not-too-distant future a fleet of driverless cars will cater for our transport needs. Well to help us pick through the options we’re talking with Laura Higgins, Senior Executive Leader of ASIC’s MoneySmart. Laura, good morning. [Laura Higgins, ASIC]: Good morning Andrew. Good morning Jo. [Male host]: So is it worth it, buying a car? We’ve obviously discussed public transport, if you can use it, fantastic. But if you do need to buy a car what do you need to consider as far as those costs of the registration, insurance, fuel and maintenance and the like? [Laura]: Well, that’s a good point Andrew. All of those extra costs that you’ve just mentioned that lots of people don’t think about when they’re in the car yards. So I think this is really timely for us to have a chat about this because we know that there’s a peak in car sales towards the end of the financial year. We start seeing lots of ads on the television of this is the time to buy, there’s a great deal, so it’s really important that people start thinking about that now rather than when they’re in the car yard thinking about what they can afford and doing their research. [Female host]: Laura, we mentioned ride-sharing services earlier, and taxis and things like that. If people don’t use cars that much how do the costs compare between having a car whenever you need and using those rideshare services or taxis if you’re using cars only rarely? [Laura]: Look, I think that there’s lots of information out there including obviously on MoneySmart, where you can do the math. You know do the research, think about how you move around? Where you live? How often you would use the car? What it costs for your insurance and your rego? And those ongoing costs for a car. We recently became a two car family and looking at the outgoing costs for the initial payment, which was around $7,000 and then looking at the running costs over three years, which was $17,000 was quite interesting conversation to have, about whether it was indeed worth it for us to have that second car in the driveway. Also, considering whether it should be a new or a used car? Clearly you’re not going to pay as much for a used car, but there may be ongoing maintenance costs. And that may also determine whether you buy privately or from a dealer. [Laura]: Yeah, it is very important again to do your research and to understand the risks and your responsibility as a buyer, when you’re buying in private. Making sure there’s no debt against the car, and there are national registers for you to have a look at. And when you’re at the dealer, make sure you know exactly what you’re buying and how you’re buying the car. There’s lots of time spent in what kind of car do we want? Do we want a sedan? How many doors do we want? And what colour do we want? But do we put the same amount of time into our financing options? I think that’s really important and to really understand add-on insurance and the things that people will talk to you about in a car yard that you don’t probably need those extras and they can cost a lot more over time and not be particularly of value to the consumer. [Female host]: And keeping the finances in mind, should you be saving the money for the whole cost of the car before you go out and buy it? Or should you perhaps consider taking out a loan? [Laura]: I think that is depends on your individual circumstances. It’s great to be saving for something and have the money up front and not take on that extra debt, but often our circumstances don’t allow us to do that. So I think you really do need to consider what you can afford and not spend more than that. [Male host]: There are a few options, of course, if you are deciding to to borrow to buy a car, but when should you contemplate perhaps higher purchase leasing or even salary sacrificing? [Laura]: That’s great when you have those options to consider and there could be tax advantages for some people that can make that choice. So again it’s about putting the effort into upfront into how you’re paying for that car and absolutely explore those options, read the fine print, think about what that looks like over time not just at that point before nothing’s gone wrong with the car, or you’ve had any servicing. But you have, there’s a lot to consider. [Female host]: Laura you mentioned insurance earlier. Obviously there’s the compulsory car insurance, but what other insurance should you consider taking out? And should you be considering an extended warranty on your car? I think MoneySmart website is actually a great place to go and see what that might look like for you, because often it’s not, you don’t need those kinds of insurances, they’re not value for money, and over time you’re paying more than you’re ever going to get back. So I think you really need to consider all of those additional options that will be put to you in the car yard at the last minute, which you’re often tempted to buy, if they tell you most people do this – you want to be one of those most people. So, they’re very, they can be very persuasive and tell you this is a one-off deal, and this is your last chance. There are lots of cars out there. Take your time do your research. [Male host]: Laura Higgins from ASIC’s MoneySmart. Happy driving! [Laughter] [Laura]: Nice chatting.