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Tips to buying a used car

There’s no shortage of benefits to buying a used car, but blindly paying thousands for one without the proper research and background checks is financially risky.

Here’s a checklist of what to consider when buying a used car:

  1. How much you’ll be driving it. Do you need a cheap run-around or a sturdy beast that can endure daily bouts of long-distance driving?
  2. Lifestyle factors. Is it practical for your lifestyle? For example, is there enough room for your kids or for transporting furniture?
  3. Safety. What’s its safety rating? Some older used cars lack the newer safety features that are deemed critical in the modern era.
  4. Security. Does it have modern security features?
  5. Car insurance premiums. If the car lacks the latest safety and security features, you may be facing higher car insurance premiums.
  6. Where you’ll buy the car from. You can get a car from either a dealer, an auction or a private sale, all of which have different pros and cons.

What to check when buying a used car?

You should always endeavour to check the following aspects of a used car:

  • The outside: paintwork, damage to the tyres and panels, oil leaks and broken windows
  • The inside: working seatbelts, working lights and accessories, and wear and tear on the seats and carpets
  • Under the bonnet: check the radiator cap, battery and cooling fans for signs of corrosion or damage

If possible, take the car for a test drive to see how smoothly the car runs and listen for any irregular sounds or movements the car makes.

Below are some low variable rate car loans for used cars.

Company Advertised rate Comparison rate* Monthly repayments  
Low Rate Secured Loan 4.69% 5.33% $187 More details
Personal Loan (Property Owners) 7.89% 8.10% $202 More details
Used Car Loan Unsecured 9.95% 10.09% $212 More details
Personal Loan Unsecured Variable 10.69% (up to 18.69%) 11.58% (up to 19.53%) $216 (up to $258) More details
Unsecured Variable Personal Loan 11.89% 12.15% $222 More details
Flexi Rate Car Loan 13.45% 13.71% $230 More details
Ad rate Comp rate* Repayments
Low Rate Secured Loan
4.69% 5.33% $187
More details
Personal Loan (Property Owners)
7.89% 8.10% $202
More details
Used Car Loan Unsecured
9.95% 10.09% $212
More details
Personal Loan Unsecured Variable
10.69% (up to 18.69%) 11.58% (up to 19.53%) $216 (up to $258)
More details
Unsecured Variable Personal Loan
11.89% 12.15% $222
More details
Flexi Rate Car Loan
13.45% 13.71% $230
More details

*Data accurate as at 1 November 2019. Rates based on a loan of $10,000 for a five-year loan term. Products sorted by advertised rate, then by company name (A-Z). View disclaimer.

Should you buy from a car dealer or a private seller?

Buying from a car dealer or a private seller both have their advantages and disadvantages. Below is a summary to point you in the right direction:

  Dealer  Private seller 
Cons
  • Often more expensive
  • Professional salespeople can pressure you into unnecessary purchases and add-ons through tricky sales tactics
  • The car might be encumbered
  • It’s easier to get it wrong if you don’t know much about cars
  • No warranties or cooling-off periods
  • Less legal protection
  • You and the seller are responsible for the paperwork (bill of sale, registration, transfer of title etc.)
  • Harder to get a secured car loan
Pros
  • Thoroughly inspected cars
  • Guaranteed title (free of encumbrances)
  • Legal protection, warranties and cooling-off periods
  • Additional services (e.g. handle paperwork, accept trade-ins)
  • It can be cheaper than buying through a dealership
  • You may be in a better position to negotiate
  • Can find better quality, well cared for cars

Vehicle stamp duty

Stamp duty on a vehicle is a one-off payment, so there are no ongoing costs to worry about. But it can be pretty expensive. Stamp duty varies by state and applies to both new and used cars.

How much does stamp duty cost?

The table below shows the different duty payable in each state, for the same vehicle. The estimated cost will vary with a higher or lower purchase price, or with used or more environmentally friendly cars. As such, it’s worth calculating your stamp duty fee yourself on top of using this table for comparison between states.

State or Territory Estimated duty payable
VIC $1,780
NSW $1,270
QLD $1,270
SA $1,630
WA $2,265
TAS $1,700
ACT $1,700
NT $1,270

Most popular car brands in Australia

Australia is a nation of car lovers, with have among the world’s highest numbers of vehicles per capita. But which car brands and models do we love most?

The following car brands account for the top 10 brands with highest sales figures as of June 2019:

Rank Brand Sales
1 Toyota 21,200
2 Mazda 10,806
3 Hyundai 10,001
4 Mitsubishi 8,891
5 Kia 7,200
6 Ford 7,155
7 Honda 6,232
8 Volkswagen 5,793
9 Nissan 5,514
10 Holden 4,817

FCAI also broke down which individual car models were sold the most that month, with Toyota models unsurprisingly accounting for three of the top 10:

Rank Car model # of sales
1 Toyota Hilux 5,396
2 Ford Ranger 4,851
3 Hyundai i30 3,343
4 Toyota Corolla 2,911
5 Mazda CS-5 2,911
6 Kia Cerato 2,832
7 Mitsubishi Triton 2,695
8 Mazda 3 2,533
9 Toyota RAV4 2,449
10 Hyundai Tucson 2,344

Price data sourced from caradvice.com.au

Frequently asked questions

1. Can I avoid paying stamp duty on my car?

There are some exceptions to paying stamp duty on new and used car purchases, such as if you’re on a disability pension, if the vehicle is used primarily to transport another disabled person, if you’re an eligible war veteran, etc. Read this stamp duty guide to find out more.

2. How can I pay for my first car?

Unless you’re lucky enough to receive support from the bank of mum and dad, you may need to take out a car loan. A car loan can either be secured or unsecured, and is available for both new cars and used cars.

3. Is buying a car privately cheaper than buying from a dealer?

There are financial pitfalls to both car dealers and private sellers: you could end up paying too much after getting fleeced by a car salesman, or you could waste money on a car that breaks down the instant you’ve put your name on it. But private car sales can offer a better opportunity to save big money, so long as you do your due diligence.

4. Why are used car safety ratings important?

A safe and sturdy car could also save yourself thousands of dollars in insurance excesses and repairs over the year, not to mention the significant personal costs of being involved in a serious accident. It’s also worth noting that your car insurance premiums might be lower with a safer car, as insurers do factor in the model of the car when handing out policies.

5. What’s the best time to buy a car?

Based on price data for used cars sold in Australia between 2006 to 2018, Manheim’s Market Intelligence team reported used car sales in September and October saw below average prices in 12 out of 13 years – 92% of the time. In the opposite sense, vehicles sold in March and April have achieved prices above the annual average in 12 out of the 13 years. Read more here.

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