Buying a used car has a lot of advantages over a new car, but it may have defects the seller hasn't told you about. Follow our quick ten point guide to avoid buying a lemon.
1. Buy the right used car for your needs
Besides budget you also need to consider safety, security, makes and models you like, fuel consumption versus performance, running/servicing costs, travel distances, carrying passengers, power for trailers or boats, parking, space for work or sports gear.
2. Consider other "fringe" costs
Above the cost of the car bought from the seller, there is also stamp duty, registration, transfer fee, and insurance. Factor these costs in before you go shopping for a used car that you can afford.
3. Do I buy it privately, from a dealer, online or at an auction?
Private - Advantages are that it is generally cheaper as there are no overheads and you can meet and discuss the history with the owner.
Disadvantages are that there is no warranty, no security of title, no legal comeback if you buy a lemon, may have extensive concealed damage or repair work.
Dealer - Advantages are that if there is money owing or is stolen, you have recourse against the dealer, you get a warranty, you may be offered a trade in on you old car, you have a "cooling off" period if you are obtaining finance to buy a used car from a company linked to the dealer and the car is more likely to be in a road worthy condition before being offered for sale.
Disadvantages are that dealers are often more expensive, you are likely to get a poorer price as a trade in on your old car, and some dealers can be very pushy.
Online - Advantages are that you don't have to travel, plenty of information is available on pricing, you sometimes get colour photos of the used car, you can buy in most areas of Australia, and you don't have to negotiate face to face.
Disadvantages are you may not be able to see and test drive the vehicle, particularly if you are buying interstate.
Auctions - Advantages are that they may be cheaper and have a guarantee of title
Disadvantages are that it may be subject to an auction fee, may also have to re-register the car and get a roadworthy certificate, there is no warranty, can't test drive, no legal comeback if you buy a lemon.
4. Take someone with you and get an inspection.
Two pairs of eyes and ears are better than one and it helps strengthen your negotiations if you have someone on your side, particularly if they know more about cars than you do. Preferably take along a mechanic or pay for an inspection. It usually saves you a lot of time and heartache and is well worth the money. A qualified person will identify poor repairs and rust, faulty electrical wiring, exhaust, engine noises, tyres wheel and brake faults, car interior linings, seat belts and window operation.
5. Check the ownership
In NSW Australia call R.E.V.S. REVS stands for the Register of Encumbered Vehicles. It is a statutory public register which assists the general public, the finance sector and the motor trade. REVS is a business service provided by the NSW Office of Fair Trading which can tell you if a motor vehicle or boat you are thinking of buying is carrying a debt. In order to do a REVS check you must supply :
1. Registration Number if vehicle is registered
2. VIN or chassis number
3. Engine number
To ensure the accuracy of the vehicle you should obtain the details from the vehicle and compare them with the details on the registration papers.
For a fee of $12.00 a REVS Search Certificate, which gives you conditional legal protection against repossession due to the previous owner's unpaid debt, is available to you for purchase online. You can also purchase a certificate from the REVS call centre on (02) 9633 6333 (Sydney) or (1800) 424 988 (Country) 7 days a week. Call centre hours are, weekdays from 8:30am to 5:30pm and weekends from 9am to 5pm.
The owner must provide you with a pink slip inspection report current for the month.
6. Take it for a test drive
Take the car for a drive on a quiet road and listen for engine noise. Does it brake, steer and handle correctly? Is the suspension ok? Try a reverse park, hill start and a 3 point turn. Brake hard once or twice on an isolated section of the road at around 40 kph. Did it handle correctly or veer to one side?
7. Negotiate the best deal
Remember that while you still have the money in your pocket, you're the boss! Do your homework before you set out to purchase a used car and know what the average prices are. If they are in the ball park, offer a price slightly lower and mention that you have seen better deals elsewhere if this is correct. If they don't budge, mention the costs for repair and wait for them to talk. Depending on how much you want the car, make a slightly higher offer or ask if they could throw in something like new tyres for free. If they still won't budge, walk away. There are plenty of other cars in the market and it is likely there are better deals nearby.
8. Paying the money
Taking cash is a great way to negotiate as the sight of a wad of notes may be an incentive for a cash strapped seller. It may also be a security risk, so if you are unsure, pay by a bank cheque. If you can't raise the money from your own reserves, shop around for the best finance deal online. A good resource for borrowing money at the best rate is http://www.bestbroker.com.au/ Always get a receipt from the seller with a statement that the vehicle is unencumbered by any loans or finance. Talk to your accountant about the best way to purchase the vehicle if it is to be used for your business. They may advise you that a chattel mortgage is often the best way to borrow for this purpose, depending on your circumstances.
9. Transfer the registration
Once the sale has been agreed on, the registration must be transferred to the new owner. Make sure the seller gives you the pink slip and completes the disposal notice, then take them to the R.T.A. and pay for the transfer. Instructions on how to do this are on the reverse of the registration papers.
10. Before you drive away
Make sure you get all the keys for the car (ignition keys with transformers are expensive to duplicate). Get the service book, owner's manual and log book.
If there's an alarm, find out how to de-activate it. Is there a hidden ignition switch? Ask the owner or dealer if there is anything to know about your new used car. You may be pleasantly or unpleasantly surprised!
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