Australian used car prices bounced back in May, and it looks like they’re set to stay.
According to a new index by Moody’s Analytics and Datium Insights, Australian wholesale used vehicle prices jumped up by 10.6% in May 2020. It showed that numbers are edging back towards “pre-pandemic” prices, which comes after the 12% drop in March and April.
Moody's Analytics’ auto economist, Michael Brisson says that price stability in the used car market depends on a few distinct factors.
“Supply constraints, the substitution effect, low fuel costs, and a decline in use of public transportation have all helped prices bounce back from April lows,” he says.
“Used-vehicle prices are supported by limited supply after a slowdown in new-vehicle sales across Australia over the past 24 months.”
Brisson also predicts that this price rebound will remain for the foreseeable future, even as more social distancing restrictions are eased.
“Consumers will continue to prefer driving over public transportation while a vaccine or treatment option for COVID-19 remains elusive,” he says.
“Longer-term price growth will be difficult as a global economic slowdown restricts demand and puts pressure on the Aussie economy.”
Should I buy a used car now?
Well, considering prices aren’t likely to drop again and international travel is out of the question at the moment, now may be the perfect time to hit the road. And there ain’t nothing wrong with doing it in a pre-loved car either!
Things to remember when buying a used car
Once you have narrowed it down and found the used car of your dreams, there are a few things to do before you seal the deal. Because remember, this car has been driven before so it’s extremely important to check that it’s still fully functional and safe.
Be finance ready: Before you jump the gun and put a deposit on a used car, make sure you are financially fit to pay for the entire vehicle. Shop around for a competitive used car loan rate and ensure you get approved for the loan before making any purchase. It’s important to know what you can afford.
Ask the specifics: Don’t be afraid to ask as many questions you need to the used car seller. Find out things like how long the previous owner had the car, why it’s being sold, any previous damage and repairs, as well as whether it is roadworthy.
Organise an inspection: It’s crucial to inspect the used car you intend to buy. Whether you do it alone, with your partner or organise an insurance company or mechanic to do a pre-purchase check, ensure the job is done thoroughly. Check both inside and outside the car, under the bonnet, the tyres etc. If there are any issues or red flags, be willing to walk away (even if the price is good).
Checkout the car’s history: No matter what state you live in you can check a car’s history online. All you need is the car’s number plate and you can find out whether or not the vehicle is stolen, has an outstanding loan attached to it or has been previously written off. While there is a small upfront fee it could end up saving you more money and heartache down the track.
Take it for a test spin: It’s the age old saying, ‘try before you buy.’ When driving, listen for any odd noises when the engine is running. Ensure the accelerator, brake, steering wheel and transmission shifts all run smoothly. If you feel like you need a second opinion, take your partner or a mate with you - they may pick up on something you missed.
Negotiate the price: The beauty of a used car is there is often a bit of wiggle room when it comes to the price. If you noticed any minor issues with the car while inspecting or driving it, and it is still safe, you could use this as a bargaining tool to bring down the price. Alternatively, if there were no issues, simply offer a reasonable low price and start the negotiations from there.
Get all the paperwork: An important step to remember is to go home with all the right paperwork after you’ve signed the dotted line. Ensure you have originals of all the registration and service history documents. Plus, when you make a payment ask for a receipt with the seller’s details on it. In most cases the state registration papers include a receipt for this reason.
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