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Used car guide: Things to consider when buying a used car

Here are a few things you should know if you’re thinking of buying a used car.

Buying a second-hand car can help save you money, but it also comes with several risks. So you must know what to check for to ensure you get a good deal.

Before you go for a test drive or start looking at financing options, read our handy guide and checklist, so you know what to look for when buying a used car.

What you need to know about buying a used car

Used cars are pre-owned vehicles and bought from a dealership or private seller. The conditions of used cars vary greatly – they may be in almost-new condition, or they may be nearing the end of their life. A benefit of opting for a used car is that they are generally cheaper than buying new, and you can sometimes find a good deal for a pre-owned car in excellent condition.

Of course, some risks come with buying a car that someone else has owned. For example, many common car problems are not immediately apparent, and the owner may be unaware that a problem even exists.

Unless you are a mechanic or have experience with cars, it may be hard to determine the vehicle’s condition. However, if possible, it may be worth taking the car to a mechanic to check for any issues.

Before you buy your used car, you should also research the vehicle’s make, model and year to determine if it is suitable for you. Find out if there are any recalls or common issues with the car by checking the manufacturer’s recall section and enthusiast forums. It would help if you also prepared some questions to ask the seller about the history and condition of the car and prepare a checklist of things to look out for when you inspect the vehicle.

Where to find a used car

One of the benefits of getting a used car is that there are plenty of places where you can find one. However, there are advantages and drawbacks to each option, so make sure you choose the one that sounds right for you:

  • Online dealers. Online dealers operate used car websites where you can browse what’s available. You can find both licensed dealers and private sellers on these sites, and you can generally get the seller’s contact details or contact them directly through the website. Weigh up the pros and cons of buying a car online vs buying at a dealership.
  • Used car dealerships. If you would prefer to look at the cars themselves, you can visit one of the many used car dealerships where you can haggle in person. The benefits of working with a licensed dealer are that the car is often sold with a warranty, there is a cooling-off period, and you may find the process easier as the seller will be experienced with used car sales terms. On the downside, these are seasoned car sellers, they’ve been at it for years, and so they could try some of their sales tactics on you.
  • Trading and selling websites. There are also websites, like Trade Me and Auto Trader, where people sell their cars privately and where you might pick up a bargain. However, with a private car sale, there is no warranty. You don’t get the cooling-off period that a licensed dealer offers, plus it is difficult to determine whether the seller is reputable.
  • Auctions. Turners operates online and live car auctions. Always research what the car is worth before you bid so you don’t overpay. Cars through Turners are generally sold “as is, where is”, but you can arrange to take a test drive and have a mechanic check the car before auction day.
  • Car fairs. There are weekend car fairs held in the main cities where you can browse the cars on offer, chat to the owners, get a mechanical check and go for a test drive. For example, Auckland’s Ellerslie Carfair is held every Sunday from 9am to 12pm.
    If you opt to go with a private seller, you should always arrange to inspect the car in person before you commit to buying it.

    What you should do when looking to buy a pre-owned vehicle

    Whether you’re looking to buy a pre-owned or new vehicle, it can be tempting to buy the first car that you like. But a car is a sizeable ongoing expenditure, and it’s vital to consider your options before making your final purchase.

    Before you start looking for your car. Decide what you want. Do you want a big car because you need a lot of boot space, or do you want a small car to make it easy to park in the city? You should think about the car’s primary use and then decide how many seats you want, what kind of features you’d like, fuel efficiency and running costs. You should also determine your budget, how old you want the car to be, and what you are willing to spend on a second-hand car.

    When you start looking for your car. Do your research. Start looking online and visit a few used car dealerships. It doesn’t matter what seller you end up going with because it’s essential to understand the current market prices and what’s available. See what options your budget allows and the different types of cars you can get, so when you find the vehicle you want to buy, you can decide if you’re getting a good deal. You might also have some bargaining power when it comes to the purchase.

    Questions to ask the seller

    When you go to inspect a used car, you should take the opportunity to ask the seller a few questions about the vehicle, such as the following:

    • Why are you selling the car? First, it’s essential to understand why the seller is willing to sell the vehicle. If they have recently bought the car and are already looking to sell, it may have some serious issues that they have not declared. It may also be as simple as they found it hard to drive or uncomfortable seats. The reason for the sale may or may not affect your decision to buy, but it is worth knowing. Pay attention to their face and body language. If they get all jumpy and shifty-looking, this is a flag. Then again, they might be socially awkward.
    • Has it ever been involved in a crash or required extensive repairs? A used car may look in satisfactory condition, but it may have been involved in a significant accident or needed substantial repairs. Look for “orange-peel paint”, wavy body lines and misaligned panels – these are indicators that the car has been in a smash.
    • How many kilometres has the car done? By changing the odometer reading on a vehicle, it can be pretty easy to hide how far it has travelled. But, unfortunately, a car that has done a lot of driving is more likely to break down simply due to natural wear and tear. However, a car that’s spent a lot of time on the highway might have covered hundreds of thousands of kilometres, but these are low stress and at optimum operating conditions.
    • Are you the first owner? You should check to see if the seller bought the car new and if not, can they provide documentation showing the ownership history.
    • Do they own the car? This may seem like a simple question, but they may not have the authority to sell the vehicle in the first place, which could lead to significant complications if you go through with the purchase. In addition, if they originally purchased the car using a secured car loan, you should also check that they have repaid the loan in full, as buying an encumbered car (one that is under finance) can also result in difficulties down the line.
    • Are you prepared to negotiate on price? Both private sellers and dealers may be willing to drop the sale price, so this is a question worth asking. Say it with a smile!

      If you aren’t satisfied with their answers or believe they may not be telling the truth, there are some further checks you can do for peace of mind before you commit to buying it.

      • Search the police database to check the car is not stolen
      • Search the personal properties security register (PPSR) to check if the vehicle has debts (you need your NZ driver’s licence, car’s licence plate, credit to pay the fee)
      • CarJam is another site you can use to find out the history of a vehicle and if there is money owing on it

      Used car buyer’s checklist

      When you are inspecting vehicles or going for a test drive, use this checklist to make sure you note the car’s most essential features to help you make an informed decision.

      On your test drive

      • The gears are smooth and engage correctly
      • The engine power is appropriate to the car’s size
      • The car tracks and brakes steadily and in a straight line
      • The electrics and dials are fully operational
      • The temperature dials do not show any signs of overheating
      • The speedometer is functioning and displays your speed accurately
      • There is no irregular engine noise
      • Check the suspension and the transmission for noises, rattles or knocks
      • Test the brakes
      • Listen to the exhaust. Is it shaking, or does it sound like it has corrosion holes?
      • Try the aircon; this is costly to repair.

        The car’s body

        • There is no sign of accident or rust damage
        • There is no sign of hail damage
        • There are no panel irregularities
        • The door and boot seals are intact
        • The upholstery is in good condition
        • There are no chips or variations in the paint
        • Any visible paint in the engine bay or interior matches the car’s exterior colour.

          The car’s interior

          • The seatbelts show no signs of wear and tear
          • The lights inside the vehicle are functioning
          • The electronics, including the air conditioning, the audio and the windows, are working
          • The upholstery isn’t ripped or damaged.
          • Areas of worn, shiny trim pieces or control switches indicate high wear and mileage.

            The car’s exterior

            • You’ve taken note of the engine VIN and body number
            • You’ve checked the exterior of the engine
            • You’ve checked the engine oil and the radiator coolant
            • There is no corrosion of the tubes and brackets. (You can tap a panel or component – corroded parts sound dull and lacking resonance.)
            • Look for uneven tyre wear; that’s a sign of alignment problems caused by an incorrect set-up or worn components.
            • Is the glass free of chips and cracks?
            • Is it leaking oil or liquid?
            • Do all the lights work? Changing bulbs on newer cars is sometimes a complicated process.

                  When you buy a used car, all the factors that come into play can seem overwhelming, but you want to make sure that you’re purchasing a quality vehicle. Once you know what to look out for and after researching what cars are available, you can make an informed decision.

                  Used car financing options

                  If you’re looking to finance your used car purchase, you have a few options available to you. Here are the finance options available for used vehicles:

                  • Secured car loan. While some lenders will not approve a secured loan for a used vehicle, other lenders offer loans specifically for used cars if they meet specific requirements. These loan types require you to put up your newly-purchased vehicle as security, but in return, these loans generally have lower interest rates.
                  • Unsecured loan. If you cannot find a secured loan, you might want to look at your unsecured personal loan options. You don’t have to use your car as security for these loans, but you may find that the interest rates are higher because it is more of a risk for the lender. On the other hand, one of the benefits of an unsecured loan is that you can use the loan amount in any way you want, so you can use it to purchase the vehicle and something else if you choose, for example, car insurance.
                  • Dealer finance. If you buy the vehicle from a used car dealership, they may offer you a finance option. However, it pays to research other loan options before signing up for dealer finance.

                  Compare car finance now

                  Name Product Interest Rate (p.a.) Loan Amount Loan Term Establishment Fee Requirements Table description
                  FAST QUOTE
                  Simplify Secured Car Loan
                  7.90% - 12.95%
                  $5,000 - $500,000
                  12 - 60 months
                  $100 - $500
                  Requirements: NZ citizen/permanent resident, income of at least $500/month.
                  See how much you could borrow without affecting your credit score.
                  MTF Finance Secured Car Loan
                  10.50% - 22.50%
                  $2,000 - $100,000
                  3 to 60 months
                  $376
                  Requirements: NZ citizen/permanent resident or have a work visa, have a regular source of income.
                  Secured car loans from $2,000.
                  AA Money Car Loan
                  7.95% - 15.95%
                  $3,000 - $75,000
                  12 months - 60 months
                  $290
                  Requirements: NZ citizen/permanent resident or visa holder, earn $30,000+ /year (before tax).
                  Loan approval within an hour.
                  The Co-operative Bank Unsecured Personal Loan
                  6.99% - 17.75%
                  $3,000 - $50,000
                  6 months - 5 years
                  $155
                  Requirements: NZ citizen/permanent resident or have a valid work visa.
                  Floating-rate, unsecured personal loans from $3,000.
                  Lending Crowd Secured Car Loan
                  6.45% - 17.23%
                  $5,050 - $200,000
                  3 or 5 years
                  $350 - $650
                  Requirements: NZ citizen/permanent resident, have a good credit score.
                  100% online with no paperwork or early repayment fees.
                  Nectar Unsecured Car Loan
                  8.95% - 29.95%
                  $1,000 - $30,000
                  6 months - 4 years
                  $240
                  Requirements: NZ citizen/permanent resident or have a work visa, income of $400/week (after tax), stable credit history.
                  Payouts made within one day of approval. Applications 100% online.
                  CarFinance2U Car Loan
                  8.95% - 23.95%
                  $5,000 - No max.
                  1 - 5 years
                  N/A
                  Requirements: NZ citizen/permanent resident.
                  Get pre-approved for your next car in 30 minutes.
                  Stadium Finance Secured Vehicle Loan
                  8.95% - 19.95%
                  $3,000 - $100,000
                  Up to 60 months
                  Varies
                  Requirements: NZ citizen/permanent resident, have a disposable income of $300/week.
                  Secured loans from $3,000 and funds paid within one day of approval.
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                  Compare up to 4 providers

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