Buying a used car
Buying a car second-hand is a great option if you’re looking to
save some cash, but it can be a tricky process. Start by
researching the kind of car you’re looking at, so you’re aware of
the features it should have and can spot any modifications that
have been made. Now it’s time to start looking at cars.
Types of sellers
Most people will buy a second-hand car from either a licensed
dealer or a private seller.
Licensed dealer
This tends to be a more expensive option, but it offers the most
peace of mind – generally, a warranty and ‘cooling off period’ will
be included in the deal. The dealer must also guarantee that there
is no previous debt attached to the car.
Private sale
You’re likely to pay less for a car that is sold privately, but you
won’t have the protection of a warranty or cooling off period, and
you’ll need to organise a REVs check to ensure the car is
debt-free.
Auction
Buying at auction can be a good way to save money, but there are
lots of potential pitfalls. Generally, buyers don’t get an
opportunity to test drive or inspect the vehicle, and are not
provided with a roadworthy certificate or warranty, making it a
very risky option – particularly for first-time buyers.
What questions should I ask?
Ask any questions that you think might be relevant, starting
with:
- How many owners has the car had?
- How many kilometres has it done?
- Has it ever been in a crash?
- Has it been kept in a garage?
The answers will give you a sense of how the car has been
treated over its lifetime. Common sense will tell you that if a car
has a high mileage or several past owners, it’s probably had a
rough life.
If you’re buying from a private seller, you can also ask why
they’re selling the car and how long they’ve owned it for.
Many car owners keep an account of their car’s service and
maintenance history. Ask to have a look at these records so you can
see in writing what’s been done to the car. Generally speaking,
owners who have held onto the car’s paperwork are more likely to
have looked after it.
Should I haggle?
Haggling over the price is part of buying a car. The seller –
whether you’re buying from a dealer or privately – will expect you
to negotiate and will most likely have inflated the price
accordingly.
If you’ve done the research, you’ll have a good idea of how much
you should be paying. Set your limit – factoring in any extra costs
– and stick to it.
What extra costs can I expect?
You will need to pay stamp duty on your car purchase - the
amount will depend on the price of the car – and a registration
transfer fee.
Remember to consider these costs – as well the ongoing expenses
of owning a car – when you’re working out your budget.
DIY car inspections
You’re not looking for the perfect car - even the most cared-for
second-hand cars are likely to show some signs of wear and tear.
But you need to find out as much as you can about the car’s
condition so you can make sure that any unrepaired damage is
accounted for in the price.
Aim to view the car in the daytime, preferably in dry
conditions. Look carefully and objectively at the vehicle, and take
your time.
Even if you know a bit about cars, it’s a good idea to bring an
experienced friend or relative with you to view the car – four eyes
are better than two. You should also arrange an independent
inspection; this small outlay could save you thousands of dollars
in future repairs.
Before the test drive
The exterior
Take a good look at the vehicle from various angles, paying
attention to the following areas:
- Thoroughly check the vehicle’s exterior for dents and rust, as
well as cracked or chipped glass on the mirrors, windows or lights
– this can be expensive to replace.
- Mismatched paint or misalignment on adjacent body panels might
be a sign that the vehicle has been in an accident.
- Unevenly worn tyres might indicate wheel misalignment, worn
shock absorbers, damaged suspension, or badly maintained tyre
pressure.
Under the hood
- Check the car’s fluids. If the radiator, power steering or oil
level is low, it raises questions about how well the car has been
serviced. Radiator coolant should be clean and bright; oil should
be translucent and honey-coloured. If the oil or coolant don’t look
right, the car could be in need of some expensive repairs.
- Ask the seller or your companion to rev the engine while you
stand behind the car. Blue exhaust smoke suggests engine
problems.
- After you’ve let the car run for a while, check the engine,
gearbox and rear axle under the car for oil leaks or wet surface
residue.
Interior
- Examine the interior for general wear and tear, like rust
bubbles or rips in the upholstery. If possible, remove car seat
covers and carpets to see what’s underneath.
- Test the radio, lights, alarms, power windows and mirrors,
seatbelts, adjustable seats and any other dials and switches.
- Check that number of kilometres recorded on the odometer
matches what was advertised. Ask to see the car’s maintenance log
book or service invoices, which usually contain the odometer
reading.
On the test drive
Ask about the seller’s insurance before your test drive so you
understand what your legal liability will be in the event of a
crash. If necessary, most insurance companies are able to issue a
cover note that will protect you for a temporary period.
Don’t be surprised if the seller wants to accompany you – they
just want to be sure you don’t disappear with their car. If you
find yourself sitting next to the owner, don’t be shy about testing
the car’s limits – you’ll regret it later if you miss
something.
Take the car for about a 20 minute drive over a variety of
roads, including highways, rough and narrow streets and busy
thoroughfares. Try a U-turn and a parallel park to test the car’s
maneuverability.
In terms of testing the condition of the car, focus on the
following areas:
- Make sure that the engine power is smooth and provides enough
grunt for the car’s size.
- Test all the gears (even if the car has an automatic
transmission) – they should engage quickly and smoothly.
- Check that the car travels and brakes in a straight line.
- Be aware that if the car is bouncing on bumpy roads, the
suspension might need replacing.
- Watch the dials for overheating and any needles that are not
centred – this could indicate a fault.
- If you haven’t already, check all switches, openings and
electrics, including air conditioning, if applicable. It should
operate quietly and start to cool the car within about a
minute.
Mechanical inspections
Getting an independent inspection is one of the wisest things
you can do before buying a used car, particularly when buying from
a private seller. Privately sold vehicles aren’t covered by a
warranty, so you need to be sure that the car is mechanically
sound.
This is standard practice and should be expected by anyone
selling a vehicle. Don't trust any seller who doesn't readily agree
to it.
An inspection is easy to arrange. The State and Territory based
motoring clubs all provide highly respected services.
- NRMA vehicle inspections
- RACV vehicle Inspections
- RACQ vehicle inspections
- RAASA vehicle inspections
- RACWA vehicle inspections
- RACT vehicle checks
- AANT vehicle inspections
What paperwork should I check?
First, you should check that the car has Roadworthy Certificate
that is no more than 30 days old at the time of the sale.
If you’re buying from a licensed dealer, they must guarantee
that the car is not stolen, is not deregistered and that there is
no money owing on it.
If you are buying privately there are no guarantees, so you need
to take a close look at the paperwork.
- Organise an Encumbrance Check through your automobile club or
relevant state service.
- If the seller has kept a record of the car’s maintenance and
service history, have a good look to see exactly what’s been done
to the car.
- Check the numbers on the registration papers against those on
the car.
- Check the seller’s name on their driver’s licence against the
name on the registration papers.
- Check that the address at which you’re buying the car matches
the one on the seller’s driver’s licence and registration.
Encumbrance checks
In most States and Territories, this is known as a REVS
(Register of Encumbered Vehicles) check. The Register of Encumbered
Vehicles is a list of cars and vessels that have been used to
secure a loan or that have money owing on them.
If you buy a car that has a debt or encumbrance attached, it can
be repossessed by a financial institution – you’ll have no car, and
you won’t get your money back.
Encumbrance checks in your State or Territory
If you are a member of an automobile club (NRMA, RACV, RACQ,
RAASA, RACWA, RACT and AANT), you can ask for a debt check through
your club.
Otherwise you can go directly to the relevant service in your
State or Territory. The NSW website can be used for all other
states except Western Australia and Tasmania.
Buying an encumbered car
Buying a car that has a debt attached is not out of the
question, but you need to be careful.
First, check that the registration number, the engine number
(usually on the engine block) and the Vehicle Identification Number
(or VIN, usually found on the chassis) match up with the numbers on
the registration papers. If they don’t, something is amiss - we
recommend you look elsewhere.
If the numbers all correspond, the next step is to work out a
payout plan with the seller. Ask for a written copy, from the
lender, of the payout figure needed to clear the interest
attached. If the figure is less than the asking price of the
car, you can offer to pay out the lender directly, and pay the
remainder of the asking price to the seller.
Deal directly with the lender so that you know the encumbrance
or debt is properly cleared, and keep written proof of all
payments. Ask for a letter of discharge from the lender, which
confirms that they have cleared the car of financial interest.
24 hours before finalising the purchase, call REVS in your State
or Territory and get a REVS certificate. This certificate
protects you by law from any other lender who may have the car on
their books but have not registered it with REVS.
What paperwork do I need to sign?
Make sure everything is in writing, including the agreed price,
deposit amount and date of collection. If you’re buying from a
licensed dealer, ensure any extras (like dealer insurance or
finance) are clearly detailed in your contract.
If you’re buying privately, you and the seller will need to
complete a form to notify your state’s licensing authority of the
transfer – the seller should take responsibility for organising
this.
When should I arrange insurance?
From the moment you complete the purchase and drive the car away
you are responsible for it, so you should sort out insurance before
the sale is finalised.
Most insurance companies will offer temporary insurance (a
‘"cover note") to protect you while you arrange permanent
cover.
