As online consumerism becomes the new norm under COVID-19 restrictions, used car buyers are being urged to exercise caution when buying.
The need to self isolate and the urge to avoid public transport has led to an increased demand for personal vehicles, particularly used ones, as cars comprise more than a quarter of all items purchased in the second-hand market in Australia.
However, most second-hand car buyers fail to confirm the legitimacy of their investment through the Personal Property Securities Register (PPSR), according to the 2019 Gumtree Second Hand Economy Report.
The PPSR is used to check if a car is still encumbered (i.e it still has finance owing on it). It can also check if the car has been written off and can confirm the details of the car, such as the make, model and year it was made.
In Australia, it's the responsibility of the buyer to check if the asset is free of other interests such as existing finance, per the Personal Property Securities Act 2009, and failing to do so can result in buying a car that can be repossessed if the original owner can't (or won't) repay the loan.
Looking to buy a used car? These used car loans have some of the lowest fixed interest rates on the market
Data accurate as at 01 August 2020. Rates based on a loan of $30,000 for a five-year loan term. Products sorted by advertised rate, then by company name (A-Z). Repayments are calculated based on advertised rates. View disclaimer.
GlobalX CEO Peter Maloney has urged buyers to secure their purchase by factoring in the small cost of a PPSR report, which can cost as little as $2 per ppsr.gov.au.
“Sellers are often happy to provide condition reports, roadworthiness certificates or proof of registration, but it’s unlikely they would disclose whether the vehicle had a dubious history,” Mr Maloney said.
“Purchasers can conduct the necessary checks through a PPSR report to ensure the asset they are about to purchase will not cause unnecessary strife in years to come.
“Nobody wants to receive a call from a finance company saying that their car will be repossessed because the previous owner fell through on their loan repayments.”
One second-hand buyer Mark MacDonald was duped by such a situation, and urged fellow car shoppers to double check purchases from a private seller.
“I was told that the car was a top-model Nissan Navara and the vehicle’s luxury details, like a leather interior and security system, lead me to believe that was true,” Mr MacDonald said.
“I was excited at the prospect of purchasing a well-maintained vehicle below the recommended retail price. It wasn’t until the car was stolen some time later and we were at the police station that we realised the car was actually a low-end model.
"If I had investigated the purchase history of the vehicle before the sale, it would have been clear that the deal wasn’t as good as it seemed.”
Car sharing service to waive fees, rates during COVID-19
With more people looking to cars as a way of safely isolating while travelling, car-sharing service Popcar has, as of yesterday, announced a number of changes to make it easier for people to rent a car.
These changes include:
- Waiving all membership fees for new and existing customers, including business customers
- Cutting hourly and daily rates by 50%
- Charging just $1 for signups
According to Popcar this means a hatchback vehicle can be rented for just $7 if someone wants to make an essential trip to the shops, which is much cheaper than the likes of Uber.
"The measures taken to prevent the spread of COVID-19 are affecting everybody in unprecedented ways," Director Anthony Welsh said.
"One of the serious implications for many people will be the impact on their ability to get around, as confidence in public transport diminishes due to strengthening of the Government’s social distancing measures and concerns about contagion.”
According to Mr Walsh, these discounts are being put in place to help support Australians who want to minimise physical contact while conducting essential travel.
“We recognise we have a role to play in supporting locals and businesses in our community, by providing an affordable and safe transport option to those who do not have access to their own car, or otherwise typically rely on public transport, taxi services or ride sharing," he said.
"We have hundreds of cars available for private usage for both individuals and businesses and can offer a solution for our communities but wanted to ensure the uncertain financial outlook for many people at this time was also taken into account.”
Popcar also said it has also increased the cleaning frequency and the standard of cleaning of its cars.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states.
In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*The Comparison rate is based on a $30,000 loan over 5 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
- 'Fear of the unknown' as consumer confidence collapses
- COVID-19 sees lowest ever wages growth recorded in June quarter
- CBA full-year results: Loan deferrals falling, cash deposits rising
- Athena cuts home loan rates as you pay down your loan
- Baby Boomers drove home renovations prior to HomeBuilder and COVID-19