What to do when buying a used car

The used car market can be intimidating, so we’ve put together a handy guide. Here’s what you should know before buying a used car.

Your options

Private sellers

If you’re buying a car privately, the sellers you’ll deal with:

• are often less experienced negotiators (this means you may have the upper hand)
• don’t provide a warranty
• don’t cover vehicle faults under Fair Trading, and
• don’t provide a cooling-off period.

Dealerships

When buying from a dealership, they will probably:

• provide a warranty
• have a cooling-off period (the length of which will depend on your state) and
• handle the details and help with paperwork.

But this all means they’ll probably cost more. You’re dealing with experienced salespeople and extra fees.

Auction houses                                                

If dealing with an auction house, they:

• may hold online auctions with virtual tours and bids
• provide better choice and value
• don’t provide warranty, and
• don’t have a cooling-off period.

Whether you purchase a car from a dealership, auction or private seller, we’ll cover it as long as it’s roadworthy. GIO offers four levels of vehicle insurance cover, from Third Party Car Insurance to Platinum Comprehensive. For more info on whether your specific secondhand car is covered, contact us today.

Find out more about GIO Car Insurance

Cash vs. financing

You may be wondering if you can buy a car with cash. While most dealers won’t accept hard cash, you can pay outright with a personal check or verified funds.

Paying upfront may be good if you have plenty of savings, as you’ll avoid the fees and interest that come with a loan. However, you’ll have less money in the bank to spend day to day.

Financing offers flexibility. You get access to a car you can’t afford to buy outright. You’ll also be building your credit score. As Comprehensive Credit Reporting (CCR) becomes more widespread in Australia, positive events in your credit history can help reverse a bad credit rating over time.

Don’t cut corners with your budget

Factor in additional costs such as registration, potential repairs, transfer and stamp duty, as well as dealership fees, if applicable.

If you’re hoping to score at an auction, don’t forget to add the buyer’s premium (auction house fee) to your budget.

Do your research

Get a Personal Property Securities Register (PPSR) check

It will tell you if the car:

• has outstanding debt attached to it, or
• was stolen or written-off.

You should obtain a PPSR check even if you use a dealership. Dealers are obligated to guarantee the vehicle’s title, but a PPSR will take it a step further. If you’re buying from a private seller or auction, a PPSR check is crucial.

Organise a test drive

Ask for a test drive. If this isn’t possible in your area, request a vehicle report. These reports are typically carried out by independent mechanics and they include test drives.

Learn how to negotiate

Timing matters

Try your luck closer to the end of the calendar year — dealers may be keen to clear stock. You may also find a good deal at the end of financial year. At the very least, try the end of the month.

Come prepared

Fine tune your price estimate beforehand. Having an idea of the average prices for a model in your area will allow you to arrive well-informed. Hit them with plenty of questions to push the power in your favour. Know exactly what you’re looking for to avoid impulse-buying add-ons and accessories.

Wait it out

Don’t give in to any time pressure. A good deal is likely to still be around later, even if you sleep on it.

Read more:

• Buying a car at an online auction: Your handy guide
• Your guide to CTP Green Slip Insurance in NSW
• Why it's important to have roadside assistance

Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Consider the Product Disclosure Statement before buying this insurance. Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. The Target Market Determination is also available. 

This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. 

The information is intended to be of general nature only. Subject to any rights you may have under any law (including the Australian Consumer Law), we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.