Prospective car buyers now have access to a new smartphone app to help them see through the salesman patter and understand repayments.
ASIC says its MoneySmart Cars app will help those looking for a new or used car evaluate the real cost of buying and running a vehicle and to avoid unnecessary extras.
The average car debt per Australian household is around $19,500 and many people don't consider the underlying costs of loan interest, servicing and fuel, the Australian Securities and Investments Commission's deputy chairman Peter Kell says.
"Many consumers fall prey to poor financial decisions, when in a car yard for example, because they may be solely focused on the car or overwhelmed by information overload," Mr Kell said.
"ASIC's new app is a practical tool that puts you in the driver's seat."
The app helps would-be buyers assess the real purchase cost, including loan interest, extras and ongoing expenses and provides guidance on finding alternative methods of financing it.
The app shows that, for example, purchasing a $15,000 used car on finance will cost $817 per month and a total of $50,000 over five years, when interest and running costs are factored in.
Its research has also shown that consumers can pay up to 18 times more for life insurance when bought through a car dealer compared to elsewhere, ASIC said.
