Buying a used car checklist: Five Traps to Avoid

Few transactions are as risky as purchasing a used car, so it’s handy to know how to find a good used car when you’re in the market. John Cadogan advises that there are some protections in place when purchasing from a used-car dealer, but almost none when buying the vehicle from a private seller. Here are some things to know when buying a used car, and tips for buying a used car so you don’t end up getting burnt.

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1. Confirm the numbers

Make sure this is the first thing you look for on your used car checklist. Three critical numbers are the VIN (Vehicle Identification Number, a 17-digit alpha-numeric code on a metal plate inside the engine bay), the engine number physically stamped on the engine, and the registration number on the car’s number plates.

You need to physically sight these numbers, write them down, and confirm that they are the same as those listed on the registration papers. If they’re not, the physical car you’re looking at could be a different one than the one you think you’re buying. When the numbers don’t match, you can report it to the police.

2. Don’t buy someone else’s debt

Our second tip for buying a used car is to confirm the vehicle’s debt status. If the owner of a car borrows money to purchase the car, the lender generally uses the car as security over the debt – so if the owner defaults, the car can be seized to recover the funds. Unfortunately, an unscrupulous owner could sell the car to you, make off with the money, and default on the payments… Then the lender could repossess “your” car to recover the debt (because the car is still security over the previous owner’s loan).

How can you find out if a used car has a car loan over it? Lenders are required to register all so-called “encumbered” vehicles with the government’s Personal Property Securities Register (PPSR). By searching the Personal Property Securities Register (PPSR) you can find out, for a small fee, if the car you are planning to buy has a previous security interest registered against it by a finance company or bank. (Find out more here: https://www.ppsr.gov.au/buying-a-car)

3. Avoid repaired write-offs

Each state has its own laws with regards to write-offs and whether they can be legally repaired and sold, so check your state’s relevant website.

Unfortunately, a repaired write-off cannot generally be insured, and (if it’s a reasonably new model) will also not be covered by the factory warranty, if applicable. Check the vehicle’s insurance claim history.

4. Assess for crash damage

Our fourth tip for buying a used car is to check for hidden damage. Most people get a trusted mechanic to assess the mechanical condition of the vehicle. This is a good idea – but it is also not enough. Make sure the mechanic also looks for evidence of previous major crash repairs or storm damage repairs (such as overspray or missing fasteners, etc.). If major crash damage/repair is discovered, it’s a great idea to bypass the car in question and find another.

5. Get the finances right

Also put checking your finances before you buy on your used car checklist. Get an up-to-date assessment of the fair value of the vehicle you intend to buy (or sell). The values quoted are for vehicles in average condition with average kilometres on the clock. Adjust up slightly for low-kilometre vehicles in great condition, and adjust down for high-kilometre vehicles in poor condition. Bear in mind that fair value in most used car transactions is where the buyer thinks the price is still too high and the seller thinks the price too low.

When you’re borrowing money to purchase the car, do thorough research. Don’t just go to the bank you save with, or agree to the dealer’s in-house finance because it seems easy in the moment to do so. Assess the finance options from a range of reputable lenders.

Shaun McGowan from CarLoans.com.au says low rates and solid terms are there if you look. “It really does pay to shop around, especially now with interest rates at record lows,” he says.

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About the Author:

John Cadogan is an Australian automotive journalist and owner of AutoExpert.com.au. He frequently presents news for some of Australia’s top companies such as Channel 7’s Today Tonight and 2UE radio. John can be contacted via Twitter.

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