4 things to remember when buying a secondhand car

New car smell can be enticing, but there’s nothing quite like a bargain secondhand vehicle. But, as always, it’s best to proceed with buyer caution.

While a used car won’t immediately drop in value like a brand new motor does when it shifts from ‘new car’ status into ‘used’ gear, there are plenty of expensive wrong turns you could make when purchasing a used model. 

From car loans to car insurance, let’s explore some of the things you’ll need to tick off your to-do list when purchasing a used car.

Know what kind of car – and car loan – you need and can afford

There’s no sense buying a sleek Mercedes-Benz if you only use your car for transporting an army of toddlers or hauling greasy work equipment. Make sure you fit your secondhand car purchase to purpose, and find a price that’ll fit your budget.

If you’re not buying the vehicle outright, this could involve a used car loan. This kind of personal loan essentially works in the same way as one used to buy a new car – you borrow a set amount to cover the cost of purchasing a car, and pay this back (plus interest) over a set period of time. The only difference is it’s specifically designed for pre-loved cars which are generally older and less expensive. 

There are a lot of factors which can influence the cost of financing a car, so check out our used car loan guide for all the ins and outs of interest rates, loan terms, fees and flexible repayment options. 

Plan for vehicle registration transfer costs

Changing over the rego on your secondhand car is essential, and it’s the responsibility of you, the buyer. There are a few steps involved and costs to remember.

You’ll need to get the registration form from the seller with their declaration of the sale and take it to the relevant roads and transport authority in the state where you live (this can usually also be done online). Make sure the old owner has definitely completed a disposal notice before you do this.

Then, you’ll need to pay a transfer fee plus stamp duty which varies from state-to-state. This calculation can be based on the sale price or market value of the car, as well as the engine type and sustainability assessments. Once these costs are settled, you’ll need to organise and pay for the registration under your own name and the compulsory third party insurance (CTP) relevant to the state or territory you live in.

It gets a little more complicated if you’re buying across state borders, so be sure to read our guide on what you need to do when buying a car interstate.

Don’t forget the different levels of car insurance 

Even though you’ve sorted out CTP – which covers drivers for costs related to injuries and deaths caused on the road – you’ll likely want to investigate other kinds of car insurance. 

Third party property damage is the most basic voluntary car insurance, covering policy holders for the cost of repairing or replacing vehicles or property they damage while driving. This is usually set at a dollar limit so it may not cover the entire repair bill, and it doesn’t include coverage for your own wheels.

Third party fire and theft does a similar job to basic third party cover, with the addition of covering your own wheels in the event they are stolen or set on fire. This might be useful if you live in an area with a high crime rate and regularly park your car on the street. But remember, it still doesn’t cover any damages to your car that may happen during a road accident. 

Comprehensive car insurance provides the broadest coverage, usually for the highest price tag. Damages are generally covered for both your own vehicle and other cars involved in an insurable incident, and you’ll often also be covered for events like weather damage and if items in your car are damaged or stolen. 

Specific events, limits and exclusions will vary between all car insurance levels and specific policies, so be sure to read the details so you know exactly what’s covered and what you’re paying for. 

Consider an expert car inspection

If you’re not a total gearhead, it could be wise to get a more mechanically aware driver to check out the car. For a few hundred dollars you can cover all your bases with a professional inspection (this is usually between $200 and $400 depending on the level of service you’re after). 

These inspections are offered by independent companies as well as the major road and insurance authorities in each state and territory. The aim is to spot any mechanical or engine faults, issues with the air conditioning, worn tyres, weak suspension and general wear and tear, and they can also road-test the vehicle for you. 

It may also be worth doing a background check on the car. You can look for things like the accuracy of the odometer, whether the car still has money owing on it, if it’s passed roadworthiness checks in the past, if it’s been reported as stolen, and if it’s seen major damage or previously been written-off. 

All this information can give you a better understanding of the quality (and hence value) of the car, and help you avoid entanglements with debt or crime. 

Use the vehicle identification number (VIN) – which can be found on the rego certificate and various spots on the inside and outside of the car – to research this information. The easiest place to start your search is through the government’s Personal Property Securities Register (PPSR) for a $2 fee online ($7 assisted over the phone), but there are private organisations which offer the service.

If you’re not sure where to start on your insurance journey, check out some of the comprehensive policies below.