May 19, 2012
Buying a Car - Expats and Returning Australians
Many expats arrange the purchase of new cars when arriving back home in Australia - it's convenient, can make some sense from a financial point of view and is often a pleasant "welcome home" present. However, it is almost always more expensive than it needs to be - you don't have the ability to review alternative offers and, most importantly, "haggle". Demo or newly owned cars can also offer big discounts, but you will often need to make compromises in terms of the car you purchase.
Car dealers aren't always the rogues they are made out to be, but they will not go out of their way to offer the best deal to someone at the other end of the telephone and world. You then have two broad choices. Either wait until you arrive in Australia to make the car purchase, which is often inconvenient, especially if your car may take weeks or months to arrive (not unknown in Australia) .. or use a car broker.
We are not unalloyed fans of car brokers, mainly because their processes are not transparent and it is often impossible to determine how much they make on any individual transaction and whether there is any innate conflict of interest. The concern is that their trumpeted "buying power" largely funds their income rather than a reduced price. Having "supervised" the purchase of a few cars via brokers my view is that expats intending buying very expensive vehicles should not instruct brokers from overseas - they should wait until they arrive or pay for the process to be managed on a professional basis in Australia.
Just as an unpleasant reminder to Australian expats who have been away for a while, and new visitors to Australia - published prices for cars in Australia will often not include "On Road Costs". You need to consider the following added costs:
- Dealer Delivery Charges. If pressed to explain what this covers, the dealer will normally quote in desperation, "administration with preparing the registration, detailing of the vehicle following freight to the car yard, fitting of ompliance components, removal of protective tapes and plastics, fitting of number plates" etc.. In other words costs that should be included in the delivered price.
- Registration charges. All vehicles need to be registered in the name of an individual or a company name. These are registered with the bureau of motor registration in each state and territory. Costs and charges vary according to vehicle, type of registration (eg business, private, primary producer) and the status of buyer (eg pension car holder).
- Stamp Duty. This is payable to the relevant state/territory and is a function of the price of the vehicle. Again, some concessions may apply depending on the status of the purchaser. Luxury Car Tax (LCT). This is payable for vehicles whose price exceeds the current LCT threshold and is a function of the amount exceeding this threshold. Not a clever tax and it is currently under attack, but it is not dead yet.
Of course, your car needs to be insured - at a minimum having compulsory third party cover,and usually comprehensive cover will be taken out of new cars. Remember, bring details to Australia of your current vehicle insurance arrangements and, particularly, your no claim status. Not doing so can be expensive. It's hard to generalise, but no record at all will mean a Rating 6, whilst a five year no claim period will mean a Rating 1 - there is a very big difference in premium.
There may also be tax savings available through the use of novated leases and salary sacrificing - ask your tax advisor orcontact Exfin.