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Guide to Buying a Used Car

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Navigating the used car market can be daunting. There's always that risk of accidentally buying a lemon. But often, the opportunity to snag a great deal is too good to refuse. If you want to save thousands and find a good second-hand car, you need to be prepared. 

In this used car buying guide, we give you vital tips and essential information to help you on your car-buying journey. Here’s how to buy a used car: 

What should you do before buying a used car? 

Before diving headfirst into the used car market, make sure you do the following: 

Decide on a budget and get financing 

First and foremost, check your finances and determine a feasible budget. Aside from the initial purchase price, include stamp duty and ongoing costs such as fuel, maintenance, and car insurance. The costs can quickly add up when buying a used car. It’s best to be prepared. 

Once you have a budget in mind, it’s time to get financing. You can get used car finance through a dealership, but they usually have higher interest rates than the average loan. If you want to save money on your loan, consider a competitive, low-interest loan from loans.com.au! 

Figure out what type of car you want 

Do your research before buying a used car. For those who don’t have a model in mind, it’s best to list down what you need in a car and start your search from there. See how similar cars perform against each other to find the ideal one for you.  

Narrow down your options to avoid getting overwhelmed when you start your used car purchase journey in earnest. Having a few models in mind when you talk to dealerships or private sellers can help hasten the whole process.  

A quick online search can tell you how much a particular used car model goes for price-wise. This helps you know when you’re getting ripped off and which sellers provide the best deals. 

Should you buy from a dealership or a private seller? 

Ultimately, it depends on what you want out of your used car purchase. Car dealerships and private sellers offer their pros and cons that you must consider when buying a car. 

Dealerships have warranties and guarantees 

It may be more expensive to buy a used car through a dealership. However, they do offer compulsory warranties and guarantees which may be useful in case your used car breaks down. 

Plus, reputable dealerships properly inspect their used cars for sale. This means any issues and problems will be noted and fixed beforehand. Dealerships also take care of the paperwork that comes with buying a used car which makes it much more convenient. 

Private sellers may be cheaper 

With private sellers, buyers may have an easier time negotiating the price. Private sellers aren’t salespeople who are fighting to make their monthly quotas. So, by buying through a private seller, you may get the best price. 

However, since private sellers aren’t running a business, you aren’t protected by any consumer laws. So, what do you need to do when buying a used car privately? You must have the car inspected, and do all of the paperwork, and it’s your responsibility to ensure the used car isn’t a lemon. 

What information should you check when buying a used car? 

Before finalising a used car purchase, here’s what you need to check: 

PPSR (Personal Property Securities Register) 

The PPSR offers the ability to check any registered security interests over a vehicle utilising its VIN or Chassis number. A PPSR search is $2, which is a low price to pay to avoid buying an encumbered vehicle. 

A car’s serial numbers 

This includes the vehicle Identification Number or VIN, the engine number, and the registration number. The VIN is a 17-digit alpha-numeric code that can be found on a metal plate inside the engine bay. The engine number can be found on the engine, and the registration number is on the car’s number plate.  

Jot down these important numbers when car shopping to confirm that they match the details listed on the registration papers. Be wary if they don’t, the car could be stolen. 

Service History 

Look at the service history and logbook to ensure the used car has been properly maintained. Missed service appointments could mean the seller hasn’t been taking proper care of the vehicle. 

Also, see if the car had undergone major repairs. Or if it has been in any accidents. It may be working fine now but the seller could miss underlying issues. Make sure to check how many kilometres there are on the odometer, as well. 

What should I look at during pre-purchase inspection? 

If you have inspected the vehicle, it can be beneficial to get a qualified mechanic to inspect the car for a second opinion. The inspection should include the body, engine and all mechanical systems.  

Inspecting the vehicle should include running your eyes over the following: 

  • Body and paint – Checking for dents, loose, misaligned or mismatched panels, evidence of rust or crash repairs, and hail damage.  

  • Interior – Check the seats, carpet and interior plastics for stains, damage, cracks or wear and tear that’s not consistent with the age and kilometres of the car.  

  • Engine oil – Engine oil should be clean, and honey-coloured (not black).  

  • Radiator coolant – Coolant should be clean and brightly coloured, typically green or red.  

  • Tyres – Ensure all the tyres (including the spare) are in good visual condition without signs of damage or uneven wear, and with tread depth above the minimum wear indicators.  

  • Fluid leaks – Check the engine compartment and underneath the car for signs of oil, coolant or other leaks that might indicate poor maintenance and potential repairs.  

  • Exhaust – Check to make sure black, blue or white smoke from the exhaust is not being emitted as this typically indicates an engine problem.  

  • Seatbelts – Ensure the seat belts extend and retract smoothly, that the locking mechanism works, and that the belts are in good condition.  

  • Lights – Test the operation of head- and taillights, indicators, park lights, reverse and number plate lights.  

  • Warning lights – With the engine running, make sure there are no warning lights illuminated on the instrument panel.  

  • Equipment – Check that all the accessories work, including the air-conditioning and fan, power windows and mirrors, audio system, satellite navigation, parking sensors and reversing camera.  

  • Jack and tool kit – Make sure these important items are in place and in working condition. 

Spending time with the vehicle will give you an idea of how comfortable it is to drive and if everything is working smoothly. Ask the seller if you can drive the car on different road surfaces such as flat roads, uphill, highways and areas with sharp cornering. 

What are the final steps to buying a used car? 

Once you’ve made your budget, found a used car, and made the appropriate inspections, it’s time to finalise your purchase. Here are the last few things to keep in mind: 

Negotiate the price 

The asking price doesn’t have to be the final price. Don’t be afraid to negotiate with the seller even if you are only aiming to knock the price down by a small amount. Every dollar counts. Make a list of any faults you discovered when inspecting the vehicle and use them to drive down the price. 

Handle the paperwork 

Before you take the car home, make sure you have all the paperwork needed such as the registration, warranties, and any other documents that relate to the car. Make sure you get the original versions and not photocopies.   

Ready to buy a used car? 

Get in touch with us at loans.com.au so we can help you finance your purchase. Check out our range of low-rate loans today!

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.

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