Buying a Used Car: A Guide

So, you’re considering buying a used car? We’ve put together everything you need to find the right deal for you.

Kudos to you for realising that buying a used car does not mean buying a beat-up bomb; and that there are some really good deals from private sellers looking to upgrade or who longer need their cars.

But how do you know when you’ve found a good deal?

Research, research, research…

There’s no shortage of secondhand car listings from carsales.com.au, drive.com.au or Gumtree… it’s a buyers’ market.

Use these sites to get to know which makes and models suit your needs and price range. You can find detailed reviews on all of the different models. This is worth checking, as sometimes, a particular model of a particular year such as a ‘2018 Sport Edition’ may have a quirk that you want to avoid.

What do you need to look for when car shopping?

  1. The fewer kilometres a car has done, the less wear and tear on the engine but be mindful that durability varies between vehicle types. For example, if you are looking for a small hatch to run around the city, something that is 10 years and under and has done under 100,000kms is probably a sound bet. Something like a van is generally made for greater distances.
  2. Check the logbooks to see that the car has been serviced regularly, ideally with the manufacturer. While “one lady driver” is an overworn cliche, if the car has been overly modified or the interior is carrying a few stains, it potentially hasn’t been looked after as well as it could’ve been.
  3. Are you using this to ferry kids around or as a work vehicle? Depending on what vehicle you are looking at, always check that it has the functionality: things like boot/tray space, tow bar or roof racks may be a factor. Optional extras may make one vehicle a better deal over another.

What do you need to look for at a car inspection?

Inspecting a used car is your chance to check for signs of damage. You may want to bring a mechanic to have a look before you purchase but regardless here are some basic you should be looking out for:

  • Does the engine run smoothly?
  • Is there adequate coolant and fluid?
  • Is the oil clean?
  • Are there any signs of smoke?
  • Are the tyres in good condition and when were they last been replaced?
  • Is there a spare?
  • Do the lights, inside and outside, all work?
  • Are there any major scratches, dints or damage?
  • Are the internal features  (seatbelts, mirrors, stereo, navigation, air conditioning, etc) all working?

What do you need to do when you test drive a car?

Test driving a vehicle is the best way to get a feel for the car and check for any defects.

Always drive without the radio on, keeping an ear out for any weird noises from the engine. We also recommend driving the car in as many different conditions as possible, including stop-start traffic, freeways and highways, and up steep hills and windy roads.

For automatics, check that it is smooth to shift between the ‘gears’. For manuals, test the clutch, making sure it is smooth to move through the gearbox.

What do you need to do before you buy?

  1. Check that the vehicle identification number (VIN) matches the one on all paperwork, including the registration. Also match the vehicle’s date of manufacture, engine number (which is marked on the actual engine) and number plates with those on the registration papers.
  2. Check that the seller is, in fact, the owner. Ask to see their drivers licence and that their details much the registration. For extra peace of mind (and for a small cost) you can also get a Personal Properties Security Register (PPSR) service check to check to whom the vehicle is registered and if it has been stolen or written-off by insurance or if it is due for repossession.
  3. There is usually ‘wiggle’ room for negotiating the price in private car sales. If you have found any defects or anything that needs fixing, use this to move down on price.
  4. Paperwork for each state is a little different but you’ll need to fill out, and submit, a transfer of ownership and registration. The purchaser will also usually have to pay stamp duty. Get originals of everything, including the service logbook. For any money that is exchanged get a receipt, with the owner’s full details, including drivers’ licence.

Sebastian Paulin
Sebastian has over 12 years experience in consulting, marketing and finance. He has worked with Australia’s largest banks and emerging fintechs across lending, investing and insurance. Sebastian has a Bachelor of Commerce and Bachelor of Laws with Honours.

This information does not constitute financial advice and you should consider whether it is appropriate to your circumstances before you act in reliance on it. Any opinions, forecasts or recommendations reflect the judgement and assumptions of RateSetter as at the date of publication and may later change without notice.