Top tips for buying a second-hand car

Top tips for buying a second-hand car

To get a good deal on a second-hand car you’ll need to look beyond the price tag

When we are weighing up whether a second-hand car is a good deal often we focus on the asking price.

But there are other things that can add to the overall cost of buying a car.

If a second-hand car is on your shopping list, here’s four ways to make the most of your car-buying budget.

Compare borrowing alternatives

Number one tip: research your loan options before you start shopping. Then you won’t be at the mercy of the first loan that comes along at the car yard. It is often more expensive than other loan options and it makes it harder to negotiate a good price on the car.

If you find a second-hand car that is less than five years old, you could still be eligible for a secured car loan. Interest rates on secured loans are lower than unsecured loans because the lender can repossess the car if you fall behind in your repayments.

Car loans often have establishment fees or account-keeping fees as well.

A lower cost alternative could be a StepUp Loan. The low interest loan program allows you to borrow between $800 and $3000 at 5.99 per cent and pay it off over three years. Plus, there are no fees.

Check out the cars app from ASIC’s Moneysmart. It’s a handy way to compare the cost of buying a car, including borrowing costs.

Say no to the extras

It’s the salesperson’s job to sell you the extras. Just like the “would you like fries with that?” question at McDonald’s it can get you to buy things you may not have planned on purchasing like tinted windows or add-on insurance.

Often the insurances are not good value and only pay in limited situations. For instance, gap cover. This insurance is designed to cover the lender if you write off your car – it covers the gap between what you owe on a car loan and what the car is insured for under comprehensive car insurance.

Another add-on insurance is loan termination insurance. It comes into play if you have to return the car because an accident or injury means you can no longer make the loan repayments.

Run some checks

Lemons come in all shapes and sizes. Spending on a pre-purchase vehicle inspection can save you from buying one.

Did you know your car can be repossessed if the former owner still owes money on it? If you’re buying privately check the Australian Government Personal Property Securities Register to see if there is any money owing on it. When Veda Car History analysed 154,035 car reports ordered by Australian consumers in 2015, it found there was money owing on almost 13 per cent of cars on the market. One in 10 had previously been written off.

A screen shot of the Australian Government Personal Property Securities Register website

Cover yourself

A car can be so crucial to our everyday lives. Having some insurance can ensure your life isn’t thrown into turmoil if your car is stolen or involved in an accident.

Good Shepherd Microfinance has developed an affordable car insurance policy in partnership with Suncorp. Called Essentials by AAI, it provides theft and accident cover for your car of up to $3,000 or $5,000, and up to $20 million liability cover for loss or damage to someone else’s car or property caused by the use of your car.

a car which had run into the back of another car, damaging its front end

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