Your guide to buying a used car

Buying a used car can feel overwhelming. Whether you’re buying a used car from a dealer, purchasing privately or attending an auction, here’s a guide on what to look out for to help get a great deal on your new wheels.

The first step in buying a used car – as with any major life purchase - is research. Work out what kind of car you need and your budget. Next, browse car sites and online marketplaces to see what models are available that suit your needs, then compare their safety ratings, security features, fuel consumption, and price point, so that you have a clear idea of what you like and the going price. When determining your budget also consider incidental pre and post-purchase fees, such as an independent vehicle inspection and insurance.

Once you’ve determined your budget, if you’re considering car finance it can be a good idea to explore some options and consider pre-approval which could help make the final purchase process easier. Car loan offers can vary between banks, independent financial institutions and even directly from dealerships, so it can pay to shop around, research the fees and terms associated with each option and work out what is suitable for your individual circumstances.

Buying a used car from a dealer generally secures title and statutory used car warranty (depending on what state you’re in and the terms of the sale contract) and may make the trade-in process easier so you can dispose of your current vehicle if you have one. That said, you may find you pay more when buying a used car from a dealer. Trading in your car may also mean you get a lower price for your old car as dealers will generally look to minimise overhead spend.

Unlike buying privately, a car dealer may be able to save you some headaches. A used car dealer will guarantee that there is no money owing on the car and car trader licencing laws require dealers of used vehicles to provide a statutory warranty that meet criteria set out for their state or territory.

Private sale purchases may get you the ideal car at a lower price point and often means you can meet the owner to get a clearer idea of the car’s history. That said, it may be more difficult to enforce any implied warranties with private sellers. So, ensure that you’ve done your due diligence with a thorough interior and exterior vehicle check.

While many car buyers inspect cars themselves, it’s easy for faults (and subsequent costly repairs) to be overlooked if you don’t know exactly what you’re looking out for. If you’re not confident inspecting the car yourself, your state’s motoring organisation can arrange an expert inspection on your behalf for a fee.

Things to ask for from an owner before purchase:

• Certificate of registration
• Recent pink slip or safety certificate
• Driver’s licence to identify the seller
• Rego, engine and Vehicle Identification Numbers (ensure they match what is listed on the paperwork).

A used car auction may be able to save you money provided you’ve done your homework and are comfortable with the risks. Car auctions are often for ex-government and fleet cars and while a purchase guarantees title on the vehicle, it may not come with any warranty, depending on the sale contract.

You need to be sure you feel comfortable with the make and model you’re bidding on as you’re unlikely to be able to test drive and may not be able to inspect the car on the day of auction, though you can usually carry out an inspection the day prior. Like any auction environment, it’s important to stay level-headed and committed to your budget.

While used cars sold at dealerships and at auction go through inspection processes, it is your responsibility to arrange for any independent professional inspection on used car sales, including private sales — if you don’t do it yourself.

Things to look out for in a used car inspection:

• Body — check the exterior for dents, rust and handle any fixture damage. Handy tip: carry a fridge magnet with you to place over areas that may have filler on them – the magnet won’t stick if filler has been used. Also check the paint job for consistency and imperfections, and that the tyres have enough tread.
• Interior — check that all seatbelts function as they should, that the upholstery is in advertised condition and that all accessories work properly. Don’t forget to also check the boot.
• Mechanics — open the bonnet to check the coolant is clean, usually a red or green colour and not “murky”, that the radiator cooling fans and battery are in good condition and that there are no leaks. It’s a good idea to run the engine while the bonnet is open so you can monitor for exhaust fumes and any unusual noises that may indicate a problem.
• On the road — during a test drive listen out for any irregular sounds in the engine, and that the brakes, accelerator, gears and lights are all working smoothly.

If you’re borrowing from a lender, the total amount you pay depends on the amount borrowed, the interest rate charged, any other fees and the term of the loan. When purchasing a used car from a dealer or at auction you may be required to put down a deposit to secure the sale. While there is no hard-and-fast rule to do the same thing via private sale, you may want to go in person to a bank to do a secure direct fund transfer and have a record produced for you and the seller.

If you plan to apply for a car loan before purchase, be sure to negotiate loan terms where you can, be it the length of the loan, the repayment amount and frequency or postponed repayments.