Buying a used car

insurance when buying a used car

Buying a car second-hand is a great option if you’re looking to save some cash, but it can be a tricky process. Start by researching the kind of car you’re looking at, so you’re aware of the features it should have and can spot any modifications that have been made. Now it’s time to start looking at cars.

Types of sellers

This tends to be a more expensive option, but it offers the most peace of mind – generally, a warranty and ‘cooling off period’ will be included in the deal. The dealer must also guarantee that there is no previous debt attached to the car.

Private sale

You’re likely to pay less for a car that is sold privately, but you won’t have the protection of a warranty or cooling off period, and you’ll need to organise a REVs check to ensure the car is debt-free.

Buying at auction can be a good way to save money, but there are lots of potential pitfalls. Generally, buyers don’t get an opportunity to test drive or inspect the vehicle, and are not provided with a roadworthy certificate or warranty, making it a very risky option – particularly for first-time buyers.

What questions should I ask?

Ask any questions that you think might be relevant, starting with:

  • How many owners has the car had?
  • How many kilometres has it done?
  • Has it ever been in a crash?
  • Has it been kept in a garage?

The answers will give you a sense of how the car has been treated over its lifetime. Common sense will tell you that if a car has a high mileage or several past owners, it’s probably had a rough life.

If you’re buying from a private seller, you can also ask why they’re selling the car and how long they’ve owned it for.

Many car owners keep an account of their car’s service and maintenance history. Ask to have a look at these records so you can see in writing what’s been done to the car. Generally speaking, owners who have held onto the car’s paperwork are more likely to have looked after it.

Should I haggle?

Haggling over the price is part of buying a car. The seller – whether you’re buying from a dealer or privately – will expect you to negotiate and will most likely have inflated the price accordingly.

If you’ve done the research, you’ll have a good idea of how much you should be paying. Set your limit – factoring in any extra costs – and stick to it.

What extra costs can I expect?

You will need to pay stamp duty on your car purchase - the amount will depend on the price of the car – and a registration transfer fee.

Remember to consider these costs – as well the ongoing expenses of owning a car – when you’re working out your budget.

DIY car inspections

You’re not looking for the perfect car - even the most cared-for second-hand cars are likely to show some signs of wear and tear. But you need to find out as much as you can about the car’s condition so you can make sure that any unrepaired damage is accounted for in the price.

Aim to view the car in the daytime, preferably in dry conditions. Look carefully and objectively at the vehicle, and take your time.

Even if you know a bit about cars, it’s a good idea to bring an experienced friend or relative with you to view the car – four eyes are better than two. You should also arrange an independent inspection; this small outlay could save you thousands of dollars in future repairs.

Before the test drive

Take a good look at the vehicle from various angles, paying attention to the following areas:

  • Thoroughly check the vehicle’s exterior for dents and rust, as well as cracked or chipped glass on the mirrors, windows or lights – this can be expensive to replace.
  • Mismatched paint or misalignment on adjacent body panels might be a sign that the vehicle has been in an accident.
  • Unevenly worn tyres might indicate wheel misalignment, worn shock absorbers, damaged suspension, or badly maintained tyre pressure.

Under the hood

  • Check the car’s fluids. If the radiator, power steering or oil level is low, it raises questions about how well the car has been serviced. Radiator coolant should be clean and bright; oil should be translucent and honey-coloured. If the oil or coolant don’t look right, the car could be in need of some expensive repairs.
  • Ask the seller or your companion to rev the engine while you stand behind the car. Blue exhaust smoke suggests engine problems.
  • After you’ve

    let the car run for a while, check the engine, gearbox and rear axle under the car for oil leaks or wet surface residue.

  • Examine the interior for general wear and tear, like rust bubbles or rips in the upholstery. If possible, remove car seat covers and carpets to see what’s underneath.
  • Test the radio, lights, alarms, power windows and mirrors, seatbelts, adjustable seats and any other dials and switches.
  • Check that number of kilometres recorded on the odometer matches what was advertised. Ask to see the car’s maintenance log book or service invoices, which usually contain the odometer reading.

On the test drive

Ask about the seller’s insurance before your test drive so you understand what your legal liability will be in the event of a crash. If necessary, most insurance companies are able to issue a cover note that will protect you for a temporary period.

Don’t be surprised if the seller wants to accompany you – they just want to be sure you don’t disappear with their car. If you find yourself sitting next to the owner, don’t be shy about testing the car’s limits – you’ll regret it later if you miss something.

Take the car for about a 20 minute drive over a variety of roads, including highways, rough and narrow streets and busy thoroughfares. Try a U-turn and a parallel park to test the car’s maneuverability.

In terms of testing the condition of the car, focus on the following areas:

  • Make sure that the engine power is smooth and provides enough grunt for the car’s size.
  • Test all the gears (even if the car has an automatic transmission) – they should engage quickly and smoothly.
  • Check that the car travels and brakes in a straight line.
  • Be aware that if the car is bouncing on bumpy roads, the suspension might need replacing.
  • Watch the dials for overheating and any needles that are not centred – this could indicate a fault.
  • If you haven’t already, check all switches, openings and electrics, including air conditioning, if applicable. It should operate quietly and start to cool the car within about a minute.

Mechanical inspections

Getting an independent inspection is one of the wisest things you can do before buying a used car, particularly when buying from a private seller. Privately sold vehicles aren’t covered by a warranty, so you need to be sure that the car is mechanically sound.

This is standard practice and should be expected by anyone selling a vehicle. Don't trust any seller who doesn't readily agree to it.

An inspection is easy to arrange. The State and Territory based motoring clubs all provide highly respected services.

  • NRMA vehicle inspections
  • RACV vehicle Inspections
  • RACQ vehicle inspections
  • RAASA vehicle inspections
  • RACWA vehicle inspections
  • RACT vehicle checks
  • AANT vehicle inspections

What paperwork should I check?

First, you should check that the car has Roadworthy Certificate that is no more than 30 days old at the time of the sale.

If you’re buying from a licensed dealer, they must guarantee that the car is not stolen, is not deregistered and that there is no money owing on it.

If you are buying privately there are no guarantees, so you need to take a close look at the paperwork.

  • Organise an Encumbrance Check through your automobile club or relevant state service.
  • If the seller has kept a record of the car’s maintenance and service history, have a good look to see exactly what’s been done to the car.
  • Check the numbers on the registration papers against those on the car.
  • Check the seller’s name on their driver’s licence against the name on the registration papers.
  • Check that the address at which you’re buying the car matches the one on the seller’s driver’s licence and registration.

Encumbrance checks

In most States and Territories, this is known as a REVS (Register of Encumbered Vehicles) check. The Register of Encumbered Vehicles is a list of cars and vessels that have been used to secure a loan or that have money owing on them.

If you buy a car that has a debt or encumbrance attached, it can be repossessed by a financial institution – you’ll have no car, and you won’t get your money back.

Encumbrance checks in your State or Territory

If you are a member of an automobile club (NRMA, RACV, RACQ, RAASA, RACWA, RACT and AANT), you can ask for a debt check through your club.

Otherwise you can go directly to the relevant service in your State or Territory. The NSW website can be used for all other states except Western Australia and Tasmania.


Category: Insurance

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