How to avoid having a bad outcome when buying a used car
Purchasing a new car is exciting, regardless of whether it’s straight from a showroom, or a used car. If you’re looking for a used car to fit your budget, there are some extra things to consider, but it’s possible to get great value and stay away from the ‘bad eggs’. Following are some tips for getting a good deal on your used car.
The importance of research
Because a pre-owned car has had previous owners (sometimes several), there are some risks associated with buying one. It is important to know what you’re looking for, and what you’re looking at.
Looking at publications or websites geared around vehicles (such as Motor magazine or the automotive section in major newspapers) will help you decide on a car after determining what type and size of car will suit you, and the budget you have to work in. Classified websites such as carsales.com.au can also be valuable research tools in establishing what makes and models of cars fall within your price range.
Researching car reviews will often show you what issues (if any) generally occur with certain makes and models of cars, and tips on what to watch for when buying the specific car pre-owned. These can help you narrow down your choices even further, or find out more about what car you’ve decided on. Forums and user-review websites can be extremely helpful in discovering the reality of how a specific car runs, and what’s involved in owning one, rather than what you see in advertisement or what car sellers will tell you.
Price and value
When it comes to used cars, if a price sounds too good to be true, it often is. This doesn’t necessarily mean avoiding pre-owned cars altogether, it just means you need to be careful, and realistic about pricing. There are a plethora of quality used cars on the market, from nearly new to well-maintained older vehicles; it just comes down to your research.
Used cars will allow you to avoid high depreciation rates associated with new cars (which can lose up to 50% of their value in the first 3 years). Used cars mean paying less upfront for an asset that will depreciate at a slower rate. There are plenty of websites that offer free valuation tools, and provide price guidelines for new and used cars. These are great research tools, as are classifieds websites, for the value of your car, and indications of what the actual asking price is for a particular make or model.
When drawing up a budget for used-car purchases, remember to account for motor vehicle stamp duty, insurance, and registration. Luckily, used cars are often priced to allow for negotiation, so if a car is just out of your price range, don’t be scared to haggle. This will be even more effective if you’re ready to make a decision and have your finance organised, as from a seller’s point of view accepting a slightly lower price today is better than someone maybe committing to the higher price sometime in the future. This applies to both dealership sales and private sales.
Driveability and mechanical condition
Make sure you test drive any vehicle before committing to purchasing it. This may bring any problems the car has to light, and also gives you an idea of how it is to drive and if it’s suitable for you. If you have little experience with the mechanics of cars, consider taking someone along who knows their stuff, or have a professional take a look at the vehicle. Pre-purchase inspections of used vehicles are a great idea, as they will highlight any possible issues the car may have. These can be arranged through a qualified mechanic, or your state motoring organisation (NRMA, RACV, RACO, etc.)
It is important to consider the safety features of a car, new or used, before you decide on a purchase. Some features to
look for include driver, passenger and curtain airbags (front and rear), Electronic Stability Control (ESC), Traction Control and Anti-Locking Brake Systems (ABS). You should also find out the safety rating of the specific car you’re intending on purchasing. In Australia, ANCAP provides simulated crash test data and safety ratings for the majority of passenger vehicles, and USCRs use statistics from over 3 million actual crashes on Australian roads to provide realistic safety ratings on vehicles.
You should also explore the Victorian TAC’s website, as it provides research tools and safety information on thousands of models sold in Australia over the past two decades. This includes the ANCAP and USCR safety ratings and detailed crash data, as well as what standard safety features are found in each model, comparison tools, and more. The “How Safe Is Your Car?” website can be accessed here.
Private vs. dealer sales
Most used car buyers must decide between buying privately and buying from a dealership. Buying privately will generally give you a lower price, however there are higher risks associated with it. Dealerships must comply with laws governing commercial sales of motor vehicles, and will usually be covered by a statutory warranty. This will ensure the dealership is selling you a car of reasonable quality, with a clear title.
If you are purchasing privately, you should perform background checks on the vehicle to ensure it is a good option before purchasing. It is important to verify registration documents and the seller’s identity (drivers licence or similar), then check these against the registration papers.
You can also use online tools to complete more detailed background checks on vehicles before purchasing them. Some websites can, for a fee, provide a range of information on a car including it’s sale history, details of any outstanding finance, and whether it is stolen or has been written off.
If you buy a car form a dealership, it will most likely be covered by warranty. The type of warranty this is, and how long it lasts, will depend on the car’s manufacturer, age, state in which the dealership operates, and whether or not an extended warranty is offered by the dealership. Private sellers won’t often supply warranties.
A manufacturer warranty will cover and new cars, and will typically last from two to five years or up to a number of kilometres. Most of these warranties are transferable, so if you purchase a used car within its manufacturer warranty range you will continue to be covered until the time or distance limit is reached.
Licensed car dealership are typically required to provide a statutory warranty on all cars they sell, regardless of whether the manufacturer’s warranty has expired or not. These warranties are free and oblige the dealer to repair any defects that occur in a certain time after the vehicle is purchased.
The length of a legally required statutory warranty will vary between states, but you can generally expect a standard warranty of three months or 5,000km on vehicles less than 10 years old, with less than 160,000km on the odometer. Older or higher mileage cars may elicit a shorter warranty, or in some cases no warranty will be required by law.
Extended warranty is an optional additional warranty provided by a third-party, other than the dealer or manufacturer, which will provide extra cover after a vehicle’s statutory or manufacturer warranty has expired.
These warranties are purchased for an additional fee, though some dealerships may include an extended warranty at no extra charge. It is not necessary to purchase these extended warranties at the same time as the vehicle purchase, however you can typically only buy them if the car is covered by another form of warranty at the time.
There is a wide range of extended warranty products available, which offer different prices, lengths of cover, inclusions, exclusions and servicing requirements. Naritas also provides extended warranties from several of Australia’s leading extended warranty companies – for more information please call us on 1300 558 887 or Live Chat Now
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Your Guide to Buying a Used Car
An overview on what to look out for when searching for and buying a used car.