How to buy a used car

No matter whether you're buying brand-new or used-but-new-to-you, purchasing a car is exciting. If you're in the market for a pre-loved car then there are a few more variables to consider, but it's also possible to get really good value and steer clear of the lemons.

Here are our top tips for smart used car buying.

Do your research

There are risks associated with purchasing a used car. After all, it's been owned and driven by at least one other person before you, if not several. Knowing what you're looking for - and what you're looking at - is important.

Determine the type and size of car you are looking for and the amount you have to spend. Use publications and websites like www.redbook.com.au, www.goauto.com.au, Wheels Magazine, Motor Magazine and the automotive section of major newspapers to narrow down your options and help you select one (or a few) specific makes and models that you're interested in. Automotive classifieds websites like www.drive.com.au and www.carsales.com.au can also be valuable research tools to help you determine which makes and models are in your price range.

Once you've decided on an exact make and model, do some additional research - find out other what current owners think of their car, what (if any) problems commonly occur with this make and model, tips on what to look for when buying this make and model used, and so on. Automotive "user review" websites like www.carnod.com.au are very helpful for this sort of research, as are some Google searches - with the plethora of forums and bulletin boards on the world wide web you can find examples of owners discussing their experience with their vehicle for pretty much any make and model.

Price and value

As the old saying goes: if the price seems too good to be true, then it is probably is. This applies to used cars too, but that doesn't mean that you should avoid all used cars. There are thousands of quality used cars for sale, ranging from near-new models to well-maintained older vehicles.

New cars can lose as much as 50% of their value within three years. Many people look to the used car market as an opportunity to avoid the high depreciation rates associated with new cars - you pay less upfront and stand to lose less of the vehicle's value shortly after purchase. Research websites like www.redbook.com.au in a new window offer free valuation tools and provide vehicle price guidelines for both new and used cars. Classifieds websites like www.drive.com.au and www.carsales.com.au are also valuable resources, as they provide a "real world" indication of the prices that sellers are currently asking for particular makes and models.

Consider your budget when looking at a used car, taking into account motor vehicle stamp duty, insurance and registration. Used vehicles are often priced to allow for reasonable negotiation, so don't be afraid to ask for a lower price - particularly if you already have your finance organised and you're ready to make a decision. This applies to both dealership sales and private sales.

Driveability and mechanical condition

Take the car out for a test drive before you purchase. Driving the car may highlight any problems it has and will give you an idea of how it drives and its suitability for your needs.

If you're not mechanically-minded then consider engaging the help of someone who is, or have the vehicle checked out by a professional. A pre-purchase inspection is a good idea as it can highlight any potential issues. Pre-purchase inspections can be arranged through by any qualified mechanic or your state motoring organisation (RACV, NRMA, RACQ, etc).

Safety

Safety is a very important factor to consider any time you buy a car - new or used. Safety 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).

ANCAP and Used Car Safety Ratings (USCRs) are the two main sources of safety information for passenger vehicles sold in Australia. ANCAP provides simulated crash test data and safety ratings for a wide range of passenger vehicles, whereas USCRs use statistics from over 3 million actual crashes on Australian roads to provide "real world" safety ratings for a wide range of makes and models.

The Victorian TAC's "How Safe Is Your Car?" is an invaluable resource for the safety-conscious. It provides research tools and safety information on thousands of models sold in Australia over the past two decades, including ANCAP and USCR safety ratings and detailed crash data, information about standard safety features found in each model, comparison tools, and more. The "How Safe Is Your Car?" website can be accessed at www.howsafeisyourcar.com.au.

Private vs. dealer sales

Choosing between buying privately versus from a dealership is a decision most used car buyers face.

Buying a car privately often offers the advantage of a lower price; however the risks are also higher. Dealership cars are normally covered by a statutory warranty and dealerships must comply with laws governing the commercial sale of motor vehicles, meaning that the dealership must guarantee that the vehicle is of a reasonable quality and comes with clear title, amongst other things.

If you do decide to buy privately then you should perform some background checks on the vehicle before proceeding with the purchase. Verifying registration documents is important, as is verifying the seller's identity (from their drivers licence, or a similar document) and cross-referencing this against the registration documents.

There are also a number of online services available which can help you perform more detailed background checks on a vehicle you are thinking of purchasing. Websites such as carhistory.com.au can, for a fee, provide a range of information about a car, including details of any outstanding finance against the vehicle, whether it is stolen or has even been written off, information about the vehicle's known sale history (including odometer readings), and more.

Warranty

Vehicles purchased from a dealership are normally be covered by a warranty. The nature and length of this warranty will depend upon the manufacturer, the age of the vehicle, the state in which the dealership is located and whether the dealership chooses to offer an extended warranty. Private sellers do not supply warranties.

Manufacturer warranty

New cars are covered by a manufacturer warranty, the length of which typically ranges from two to five years and typically also has a kilometre limit. Most manufacturer warranties are transferrable, meaning that if you purchase a used vehicle within its manufacturer warranty period you will continue to enjoy the benefits of the manufacturer warranty until the time and/or kilometre limit is reached.

Statutory warranty

All licensed car dealerships are typically required by law to provide a statutory warranty on every car they sell, even if the vehicle's manufacturer warranty has expired. Statutory warranties are free, and require the dealer to fix any defects that occur soon after the purchase of the vehicle. The length of the legally required statutory warranty varies from state-to-state, although a three month/5,000km warranty for vehicles under 10 years old that have covered less than 160,000km is normal. For older or higher mileage cars, a shorter statutory warranty or no warranty at all may be provided for by law.

Extended warranty

An extended warranty is an "add-on" warranty provided by a third-party other than the dealer or manufacturer, typically providing additional warranty cover after a vehicle's statutory warranty and/or manufacturer warranty has expired.

Extended warranties are typically purchased for an additional cost over-and-above the price of the vehicle, although some dealerships may choose to include an extended warranty on their vehicles for free. Extended warranties do not need to be purchased at the same time as the vehicle, nor do they need to be purchased from the dealership where the vehicle was purchased. However, extended warranties can typically only be purchased whilst the vehicle is still covered by some form of warranty - either statutory or manufacturer.

There are a huge range of extended warranty products available, all offering differing pricing, lengths of cover, inclusions, exclusions and servicing requirements. stratton provides extended warranties from several of Australia's leading extended warranty companies - for more information please click here, call us on 1300 STRATTON (1300 787 288).

How stratton can help

No matter whether you are buying new or used, our expert finance consultants can help tailor a car finance package to meet your individual needs. Our relationships with some of Australia's top lenders ensure we have access to the best range of car finance products available, at the lowest cost to you.

To find out more, get an instant online car finance quote or call us on 1300 STRATTON (1300 787 288).