posted on 14 October 2024
When buying a used car, you may be wondering if you’ll be able to get one that’s safe and reliable at a better price. The short answer is yes! Buying a used car can be a smart way to save money, but it’s important to go through the process carefully.
This step-by-step guide will help you navigate everything from researching and inspecting the car to negotiating the top purchase price and completing the purchase, ensuring you get a reliable vehicle that suits your needs and budget.
In this guide, we’ll be covering:
- Your step-by-step guide to buying a second-hand car in Australia
- Frequently asked questions about buying a second-hand car
Your step-by-step guide to buying a second-hand car in Australia
With improved new car supply and fewer COVID-related vehicle delivery delays, Australia’s used car market is gradually recovering as supply gradually increases to meet demand. Take this stat: the average second-hand car buyer in July 2024 paid $1,600 less than a year ago. However, used car prices remain high, especially at dealerships, as the industry continues to deal with supply shortages.
If you’re looking to buy a used car, expect fluctuating prices and competition for well-maintained vehicles. Trade-ins continue to receive strong offers, but as a buyer, it’s essential to conduct an independent vehicle inspection and review the vehicle’s history to avoid unexpected surprises.
Buying a used car can feel overwhelming, but with the right approach, it’s a lot easier. This step-by-step guide will walk you through the process, from researching and setting a budget to conducting an independent vehicle inspection, negotiating a fair price, and completing the paperwork, ensuring you make a confident and informed purchase.
Tip from the author: If you’re looking for a way to test drive a car or need a temporary car solution instead, why not rent a car on Turo to get you there?
1. Determining your budget
Start by nailing down your non-negotiables and nice-to-haves. Think about your current car needs — are you starting a family, moving house or commuting more? Features like parking sensors or extra space might become must-haves. Next, figure out your budget by considering your upfront payment or manageable monthly instalments, after covering essentials like rent, bills, and groceries.
Be honest with yourself about how secure your income is and what is realistic for you. Lastly, stick to your budget and don’t get caught up in impulse buys!
Considering additional costs (insurance, registration, etc.)
Don’t forget the extra costs when you’re budgeting — registration, insurance, and maintenance. A good rule of thumb is to keep all car-related expenses under 15% of your monthly income and set aside a safety cushion for unexpected repairs.
Some brands, like Toyota and Mazda, are easier and cheaper to fix in Australia since parts are easy to source onshore, so it’s good to consider how affordable the car will be to repair in the long term.
Financing options: Loans vs paying upfront
Financing a car with a loan spreads payments out over time, which can make the purchase more manageable, but you’ll also pay interest, increasing the overall cost. If you’re financing the car through a credit provider, ensure you understand the loan terms and any security interests that may apply.
Paying upfront gives you full ownership of the vehicle and can strengthen your negotiation position. However, it may deplete your savings, leaving less room for other financial priorities.
2. Researching the right used car
When buying a second-hand car, do not overlook safety! Research the car safety ratings, features, reliability and running costs for each car model you want to look at. How will you use this car? Do you need something small for city driving, or a larger car for road trips or family? If your car is going to be in high use, make fuel efficiency a priority.
At this point in your car purchasing journey, you can reference your checklist of non-negotiables and nice-to-haves. Don’t forget to check potential insurance costs, especially if you’re choosing a car with modifications or an imported car where parts may be difficult to source, bumping up the insurance price. Keeping these in mind, you’ll be better equipped to find a car that’s perfect for you and your budget.
Popular used car models in Australia
Top-selling used cars in Australia include models like the Toyota Camry, Toyota Corolla, Mazda CX-5, and Mazda 3. These vehicles are known for their reliability and strong safety features, making them popular choices for car buyers.
3. Where to buy a used car
You can purchase a used car from a licensed motor dealer, through private sellers, or via online marketplaces like Carsales, Gumtree, or Facebook Marketplace. Dealerships often provide a dealer guarantee and car warranty, while private sellers may offer better prices but fewer legal protections.
You can also check classified ads in newspapers or local community boards. Each option has its pros and cons, so it’s important to do your research before buying.
Dealerships
Buying a used car from a motor dealer might come with extra protection, like a statutory warranty, so you’re guaranteed no money owing on the car. If you have an old car, you can trade it in, and the dealership will handle most of the paperwork, making the process simpler. Plus, you can test drive the car and even negotiate for extras like a longer registration or a full detail if they won’t lower the price.
Additionally, most dealerships offer a cooling-off period, giving you a set number of days to change your mind after signing the purchase contract.
On the downside, dealerships often charge more than private sellers, and there may be extra processing fees. You might also face some sales pressure or find that the car’s full repair history isn’t always available.
Private sellers
Buying privately typically means getting a much more competitive price, particularly if the seller is looking to get rid of the car very quickly. So in general, you’ll probably have more room to negotiate. You’ll also experience less sales pressure compared to a dealership. However private sellers aren’t required to be as transparent, so there can be more risk of hidden problems.
That’s why it’s important to have the car inspected, either by your state’s monitoring authority or a trusted mechanic. Warranty won’t be offered and you’ll need to check for any outstanding debt using the PPSR. Plus, you’re responsible for handling all the paperwork yourself, which can be a hassle.
Online marketplaces
Private sellers usually advertise through online platforms (Gumtree, Facebook Marketplace, or Carsales), classified ads, or even word of mouth. The sale is generally a private sale handled one-on-one between the seller and buyer, without the formalities or protections you might get from a dealership.
However, buying through these platforms comes with risks. You may encounter fraudulent listings, and it’s not always possible to inspect or test drive the car beforehand. Seller quality can vary, and some platforms charge fees. Negotiating can also be harder without face-to-face interaction, making it difficult to build trust and secure the best deal.
Tips for navigating online marketplaces
When buying a used car through online platforms like Carsales, Gumtree, or Facebook Marketplace, it’s essential to take precautions to ensure a safe and smooth transaction. Follow these tips to navigate online marketplaces confidently:
- Verify the seller: Check seller reviews and ratings if available. Look for verified or reputable sellers.
- Request detailed information: Ask for the VIN to access the vehicle’s history report. Request recent photos, an odometer reading and detailed descriptions.
- Arrange pre-purchase vehicle inspections: Always arrange to see and test drive the car in person before making any commitment. Meet in a safe, public location.
- Get a professional inspection: Arrange for a mechanic to inspect the car for hidden issues.
- Check documentation: Ensure you receive all necessary documents, such as the title, owner’s manual, if it’s been serviced regularly, and any warranties or guarantees.
- Negotiate price: Use your research and any issues found during the inspection to negotiate the price.
- Verify payment methods: Use secure payment methods and avoid carrying large amounts of cash. Be cautious of wire transfers and payment links from unfamiliar sources.
Test drive without the commitment
Still deciding on the perfect car? Why not rent one on Turo and give it a spin before making your decision? It’s a flexible way to experience different models and see which one fits your lifestyle without the long-term commitment.
4. Inspecting the used car
It’s crucial to inspect the car in person. Check for any signs of previous crash repairs, or uneven wear on the tyres, and make sure the engine runs smoothly. Don’t forget to check the odometer reading and test the power windows, air conditioning, and other electronics. Take the car for a test drive to evaluate how it handles, ensuring the steering wheel and brakes respond smoothly.
Your used car inspection checklist
Exterior:
- Body condition: Check for dents, scratches, rust, and any signs of previous damage or repairs.
- Paint: Look for mismatched paint, bubbling, or areas that could indicate rust or recent touch-ups.
- Tyres: Check the tyre tread and its depth for any uneven wear, which could suggest alignment issues.
- Windows & lights: Inspect for cracks or chips in the windshield and make sure all lights (headlights, indicators, brake lights) work.
- Undercarriage: Look underneath for signs of rust, leaks, or damage.
Interior:
- Seats & upholstery: Look for tears, stains, or excessive wear in the seats, carpets, and ceiling.
- Dashboard & electronics: Test the dashboard functions, including warning lights, speedometer, and odometer reading. Check all electronics — radio, air conditioning, and power windows.
- Controls: Make sure the brakes, accelerator, and clutch pedals feel smooth and responsive.
- Smell: Be alert for musty smells that could indicate water damage or mould.
Engine & mechanical:
- Engine condition: Pop the engine compartment and check for oil leaks, corrosion, or worn belts and hoses.
- Fluids: Check the oil, transmission, and brake fluid levels — low levels might suggest poor maintenance.
- Battery: Ensure the battery terminals aren’t corroded and look clean.
- Exhaust smoke: Start the car and look for smoke coming from the exhaust — blue smoke may indicate oil issues, while black or white smoke can suggest other engine problems.
Test drive requirements:
- Brakes: Test the brakes for smoothness and responsiveness — listen for any squealing or grinding noises.
- Steering & suspension: Ensure the steering wheel steers easily and feels stable, without pulling to one side.
- Acceleration: Make sure the car accelerates smoothly without hesitation or unusual noises.
- Transmission: Check for smooth gear changes (manual or automatic) without jerking or slipping.
Paperwork needed:
- Service history: Ask for the service records to ensure regular maintenance has been done and determine how much maintenance costs will be.
- VIN check: Confirm the VIN or chassis number matches the paperwork and run a check for accidents or outstanding debt.
The importance of getting a professional inspection
Getting a professional inspection helps identify hidden issues, like mechanical problems or previous damage that may not be that obvious. It can save you from costly repairs later and give you leverage in price negotiations.
5. Understanding vehicle history
Getting a PPSR check (Personal Property Securities Register) is a must. It’s a free tool that also lets you know if the car has been stolen, written off, or involved in any major insurance claims, and a quick and easy way to confirm that the car is debt-free and not tied to any outstanding finances.
To do a PPSR check, you’ll need:
- Vehicle identification number (VIN) — A unique 17-character code found on the car’s dashboard, near the windshield, or inside the driver’s side door frame.
- Registration plate number
- State/territory of registration
6. Negotiating the best price
Once you’ve inspected the car and reviewed its history, it’s time to negotiate the purchase price. Negotiation can be daunting unless you have an idea of what to do! Here are our top tips to get you through:
- Ask detailed questions: Inquire about the car’s history, including accidents, mileage, fuel costs previous owner name, registration, safety features, and how many owners.
- Adopt a third-party perspective: Pretend you’re buying the car for someone else (like a spouse or friend) to leverage a more objective stance in negotiations.
- Time your purchase: Shop at the end of the month, quarter, or financial year when salespeople may be more eager to meet their targets.
- Negotiate extras: Ask for added services or perks, such as a free detail or extended registration.
- Trust your instincts: Follow your own judgment rather than relying solely on advice from family or friends unless they’re knowledgeable about cars.
- Test drive: Ensure the car performs well on the road, as appearance alone isn’t enough.
- Take your time: Avoid rushing into a decision; make sure you’re comfortable with the purchase.
- Seek opinions: Talk to friends or family who own the car model you’re interested in to get their feedback.
- Stay flexible: Be open to adjusting your expectations based on what you discover.
- Keep information close: Don’t reveal too much personal information—let the seller provide details and focus on negotiating.
- Be ready to walk away: Always be prepared to leave if the deal doesn’t meet your needs.
- Use conditional offers: Employ the “if-then” technique to encourage the seller to make concessions, such as “If you can extend the registration, then I’m ready to buy now.”
Understanding the market value and using it to your advantage
Understanding the market value of a second-hand car is crucial when buying. It helps you avoid overpaying by giving you a clear idea of what similar cars are worth, making negotiations easier. If you find the asking price is too high or the car has issues, you can use this knowledge to argue for a lower price.
On the other hand, if the price is below market value, you’ll recognise a great deal and act quickly. Ultimately, knowing the car’s value ensures both you and the seller have realistic expectations, leading to smoother negotiations.
Make your car work for you
Adding a second car to your garage? Don’t let your old one sit idle — list it on Turo and let others rent it when you’re not using it. Turn any vehicle into a smart investment that helps offset your expenses.
7. Post-purchase considerations
After completing your used car purchase, your journey isn’t over yet. Make sure you schedule a mechanical inspection to address any wear and tear.
Getting insurance
It’s important to secure insurance before driving the car to protect yourself financially in case of accidents, theft, or damage. In Australia, at the very least, you’ll need compulsory third-party insurance to cover injury-related costs if you’re involved in an accident. Beyond that, consider comprehensive or third-party property insurance to cover damages to other vehicles, property, or your own car.
To get insured, compare quotes online from various providers, and ensure the policy suits your needs and budget.
Scheduling a service and safety check
Scheduling a service and mechanical inspection after a used car purchase sets a clear maintenance baseline, allowing you to address any immediate issues and establish a regular service schedule. Your mechanic will help address any hidden issues, and minimum wear indicators, and make sure the car is in good working condition. Simply book an appointment with a trusted mechanic to inspect and maintain vital components like brakes, tyres, and fluids.
Understanding your rights as a buyer (Australian Consumer Law)
The law protects you by ensuring the used car is of acceptable quality, fit for purpose, and matches the description provided by the seller. If the car has any significant faults or misrepresentation, you may be entitled to a repair, replacement, or refund, depending on the situation.
It’s especially important to know your rights if buying a used vehicle from a dealer, as they are legally obliged to uphold these standards. Private sales have fewer protections, so thorough checks are essential in those cases.
Warranty options for used cars
When buying a used car, you have several warranty options to consider, including a dealer warranty, manufacturer’s warranty, extended warranty, statutory used car warranty, Certified Pre-Owned (CPO) warranty, and third-party warranty. Each option offers varying levels of coverage, so it’s important to understand what’s included before choosing your warranty.
List your old car on Turo
If this purchase will be your second car, why leave the old one idle when you can list it on Turo and make money by renting it out? Or, rent out your new one to cover some of the cost. Make your car an asset that works for you.
Frequently asked questions about buying a second-hand car
How do I pay for a used car in Australia?
You can pay upfront with cash or via a direct bank transfer, which is the most straightforward method. Alternatively, if you need financing, many dealerships offer car loans or you can arrange a loan through a bank or credit union. Some sellers may accept payment through platforms like PayPal or bank cheques for added security. Make sure payment is secure and traceable for both parties.
Is it cheap to buy a car in Australia?
Car prices in Australia vary, but used cars can be affordable with careful research. New cars are pricier due to taxes and import costs. Factor in registration, insurance, and maintenance into the total cost.
Which site is best for used cars?
The best places to buy used cars in Australia include online platforms like Carsales, Gumtree, and Facebook Marketplace, which offer a wide range of options and filters. Dealerships are also a reliable choice, providing certified used vehicles and cars with warranties. For bargains, car auctions such as Manheim or Pickles are worth exploring, though they may come with higher risks.
Buying a used car can be a rewarding experience, especially when you follow the right steps to ensure you get a reliable vehicle that suits your needs and budget. By doing thorough research, conducting proper inspections, and negotiating with confidence, you’ll be well on your way to making a smart purchase. And if you’re still exploring your options or need a temporary solution, why not find your perfect rental car on Turo? It’s a great way to try out different cars before committing to a purchase.
Lucinda Starr
Lucinda is a Sydney-based content specialist and avid road tripper. Having travelled across Asia, North America and the South Pacific, she's experienced everything from glamping in a Yurt in -30 degrees in The Yukon, snorkelling in the open seas of Vanuatu and hiking the rocky alps of Kamikochi in Japan. She's currently planning her next overseas adventure, a toss-up between a classic #EuroSummer or a multi-day trek through Nepal.
