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Tips for Buying a Used Car in Australia

Before you buy your used car, it’s crucial to know what to look for in the car-buying process. You can find out all about it with Savvy today.
Published on December 7th, 2020
  Written by 
Thomas Perrotta
Thomas Perrotta is the managing editor of Savvy. Throughout his time at the company, Thomas has specialised in personal finance, namely car, personal and small loans, although he has also written on topics ranging from mortgages to business loans to banking and more. Thomas graduated from the University of Adelaide with a Bachelor of Media, majoring in journalism, and has previously had his work published in The Advertiser.
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   Reviewed by 
Bill Tsouvalas

Reviewer

Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Australia's used car market presents a wide range of options, catering to diverse needs and budgets. Indeed, according to the Australian Automotive Dealer Association (AADA), over two million used cars were sold in Australia in 2023. However, navigating this marketplace isn’t always easy if you aren’t familiar with the process. That’s where Savvy can help you out.

We’ve broken down a range of key used car buying tips to help you make the best call for your needs, from what to research ahead of time to the questions you should ask your seller and more. Find out all you need to know about buying a second-hand car with us today!

Consider your budget and research used car prices

Knowing how much you can comfortably afford upfront prevents you from getting swept away by an enticing but ultimately expensive option. Unexpected repairs or ongoing costs can be a drain on your finances, which can cause stress if the initial purchase price stretches your budget. You should also budget for costs such as registration and, if you’re taking out a car loan, interest and fees.

Once you have a budget in mind, you can go about researching models within that range. Doing so can help you avoid being overcharged for your car and negotiate more effectively with your seller. Consider the age, size, mileage and any additional features with similar cars on the market right now to give you a better idea of what you should be paying.

Think about the type of car you need

Deciding what type of car best suits your needs is another crucial step. Consider your daily driving habits: will the car be used for commuting, errands or road trips? How many passengers will you typically be carrying? Do you need ample boot space or is fuel efficiency a top priority?

Answering these questions will help narrow your search and help ensure you're looking at vehicles that align with your lifestyle. For instance, a fuel-efficient hatchback might be ideal for city driving, while a roomy SUV might be better suited to a growing family or outdoor adventures.

Keep an eye on potential running costs

Beyond the purchase price, it's vital to consider the ongoing costs of operating your car. For example, factor in fuel efficiency and how much it’ll cost to fill up the tank regularly. Research insurance rates, which can vary depending on the car's make and model and your age and driving history.

Remember to budget for routine maintenance such as oil changes and tyre rotations. Understanding these ongoing expenses ensures you can comfortably afford not just the car itself, but also the long-term financial responsibility that comes with vehicle ownership.

Making sure you have enough room in your budget for ongoing costs before you buy can save plenty of stress down the line, according to Savvy Managing Director Bill Tsouvalas.

“It’s easy to get tunnel vision and look past a comfortable budget for your household if you come across a car you like”, he said.

“You’ll always have petrol, diesel or charging costs associated with your car, as well as servicing and potential repairs, so think about these carefully before you choose your vehicle.”

Bill Tsouvalas, Managing Director - Savvy

Check the car’s servicing and repair history and registration

Before committing to buying a second-hand car, reviewing the vehicle's service and repair history is vital. Here's how you can check a car's history and registration in Australia:

  1. Ask the seller for service records: the seller should have the car's service booklet and/or paperwork for past maintenance work. These documents can provide valuable insights into the types of services performed, kilometres driven at the time of service and any major repairs undertaken.
  2. Check your state or territory government site for registration information: all states and territories keep records of vehicle registration and CTP insurance, so you’ll be able to search your government’s site to see whether it’s currently registered and insured.
  3. Engage a professional service: some Australian organisations offer comprehensive car history checks for a fee. These reports can include details on past registrations, written-off status, odometer readings and sometimes even service history information gleaned from authorised mechanic databases.

Find out if the car has finance owing

On top of checking your vehicle’s history, it’s essential to know whether the car you’re looking to buy is still under finance. There are ways to do this for free or for a small fee, including the following:

  1. PPSR check: the Personal Property Securities Register (PPSR) is a government register which keeps track of whether assets are debt-free, written off or stolen. As of March 2024, this service costs $2 to use.
  2. Ask the seller: a step you could take before this is to ask the seller directly. Honest sellers will be upfront about the debt and may seek to arrange with you who’s responsible for covering it. However, if they say there’s no finance owing, it may be worth a PPSR check.

A clean PPSR report indicating no finance owing provides peace of mind, knowing you're purchasing the car outright and won't face any ownership complications in the future. There may otherwise be a risk of having the car seized if there’s still a debt attached that you weren’t aware of.

What to check when buying a used car in Australia

Inspecting the vehicle thoroughly is another crucial step. Here's a breakdown of some key areas to check yourself, alongside information on getting a professional inspection:

DIY checks

  1. Exterior: keep an eye out for misaligned panels, uneven gaps between body parts, or overspray on the paint, as these all indicate prior repairs. The same applies for rust bubbles or fresh paintwork. It’s crucial to do this in good lighting, as darkness or rain could make scratches and dents less visible.
  2. Under the bonnet: look for leaks, loose hoses or excessive corrosion. Check the engine oil level and colour; clean oil is preferable. Dirt in the engine and other residue throughout this area of your car could point to leaks, which may be costly to fix.
  3. Engine: start the engine and listen for any unusual noises like knocking, ticking or grinding. While the engine is running, check for excessive smoke coming from the exhaust. You should start the engine cold wherever possible, as this will give you a better indication of whether the car is in working order.
  4. Tyres: another area to consider is the amount of tread left on the tyres. If there’s too much wear, you could be up for new tyres soon after you make your purchase, while uneven wear could point to wheel misalignment.
  5. Interior: inspect the seats, carpets and upholstery for rips, tears or excessive wear. Test all the electrical features like lights, air conditioning and power windows. Ensure the dashboard has no warning lights illuminated.

Getting a professional inspection

While a thorough self-inspection is valuable, consider getting a qualified mechanic to perform a comprehensive independent inspection. This can uncover hidden issues you might miss and provide valuable insights into the car's overall condition. Many mechanics in Australia offer pre-purchase inspection services for a fee.

Take it for a test drive

A test drive serves multiple crucial purposes when buying a used car in Australia. Firstly, it allows you to assess the car's overall driving experience firsthand. This includes factors like comfort, handling, responsiveness and how well the engine performs.

Notice how the car handles bumps and corners, the ease of acceleration and any unusual noises. A test drive helps you determine if the car feels comfortable and aligns with your driving style.

Secondly, a test drive provides an opportunity to check the functionality of various features. Try out the brakes, air conditioning, stereo system and any other features the car boasts. This ensures everything is in working order and avoids any unpleasant surprises after purchase.

By experiencing the car firsthand on a test drive, you gain valuable insights that can't be gleaned from simply looking at it. This allows you to make a more informed decision about whether the car truly meets your needs and expectations.

Know the key questions to ask

You should approach the car purchase armed with key questions to ask your seller, as these can help you work out what state the car is in, as well as whether the seller is being honest. Some of the main ones to ask include:

  • Can I check the car’s service and repair paperwork? A seller who isn’t forthcoming with this information indicates there may be something to hide.
  • How many owners has the car had? The more owners a car has had, the harder it is to keep track of all the information you may need.
  • Why are you selling the car? This will provide you with a clear insight into the seller’s mindset. An answer like upsizing for a growing family is better to hear than a vaguer answer.
  • Has the car been written off or stolen? This information can be checked independently, so you may wish to walk away if the seller isn’t honest.
  • Is there any finance owing on the car? The same applies here: if they don’t disclose a loan debt, it’s probably time to move on.
  • Is the car still under warranty? It’s good to know whether potential faults can still be covered by your car’s warranty.
  • Has the car been modified? Aftermarket modifications are important to know about, especially if they don’t comply with Australian law.

Additionally, having a request to take the car for a test drive or inspected by a mechanic turned down may also be a sign of something not being quite right.

Dealership vs private seller: which is better?

There's no one-size-fits-all answer to whether a dealership or private seller is better for buying a second-hand car in Australia. Both options have pros and cons, and the best choice depends on your priorities and budget.

Dealership

Pros:

  • Convenience: easier buying process with all the documents handled by the dealership, meaning there’s less paperwork than when you buy a car privately.
  • Greater peace of mind: dealerships perform inspections and offer warranties on some used cars, providing more reassurance and quality control than buying privately.
  • Trade-in: you might be able to trade in your old car towards the purchase of a new (used) one at a dealership.

Cons:

  • Price: used cars at dealerships are generally more expensive than those sold by private sellers due to dealership overheads and potential profit margins.
  • Negotiation: additionally, because of this, there’s often less room for negotiation on the price compared to private sellers.
  • Pressure: some salespeople at dealerships might employ pushy tactics to make a sale and try to convince you to add certain extras.

Private seller

Pros:

  • Price: buying from a private seller is generally cheaper than buying from a dealership, as private sellers aren’t looking to factor in profit margins.
  • Negotiation: there’s often more room for negotiation on the price, potentially leading to a better deal.
  • Unique finds: you might find rare or interesting cars not readily available at dealerships that pique your interest as a buyer.

Cons:

  • Risk: the onus is on you to inspect the car's condition and history to avoid buying a lemon.
  • No warranties: statutory warranties aren’t required for cars purchased from private sellers, so any issues after purchase may fall on you.
  • Paperwork: you'll need to handle the transfer of registration and ownership paperwork yourself when buying a car privately, as well as rely upon your seller having all the information available.

Car purchase cooling off periods by state and territory

Used cars can come with cooling off periods when you purchase from a dealer, meaning you can change your mind on the car you buy. These varying depending on where you live in Australia and are as follows:

State/territory Period In writing? Fee charged Other conditions?
Three days
Yes
Greater of $100 or 1%
N/A
One day
Yes
Lesser of $250 or 2%
Finance must be arranged with dealer
One day
Yes
Up to $100
N/A
Two days
Yes
Lesser of $100 or 2%
Fee comes out of deposit of up to 10%
Three days
Yes
Lesser of $100 or 1%
N/A

The Northern Territory, Tasmania and Western Australia do not have any used car cooling off periods legislated (as of March 2024).

Used car warranties by state and territory

Additionally, all states and territories require dealers to offer statutory warranties on used car sales. The cars that can qualify for these warranties must meet certain criteria in relation to their age and kilometres driven (and, in some cases, price). The requirements are as follows:

State/territory Warranty period Car age limit Mileage limit
First of three months or 5,000km
Ten years
160,000km
First of three months or 5,000km
Ten years
160,000km
First of three months or 5,000km
Ten years
160,000km
Class A: first of three months or 5,000km

Class B: first of one month or 1,000km
Class A: ten years

Class B: over ten years
Class A: 160,000km

Class B: over 160,000km
1. First of three months or 5,000km for cars purchased for over $6,000

2. First of two months or 3,000km for cars purchased for between $3,001 and $6,000
N/A
N/A
First of three months or 5,000km
Seven years
120,000km
First of three months or 5,000km
Ten years
160,000km
For cars purchased for $4,000 or more:

1. First of three months or 3,000km

2. First of one month or 1,500km
1. Ten years

2. Between ten and 12 years
1. 150,000km

2. Between 150,000km and 180,000km

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