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Things to consider when buying a used car

If you’re thinking of buying a used car, here are a few things you should know.

This might be your first car or it might be your fifth, but however experienced you are with purchasing vehicles, it never hurts to have a checklist before you start shopping. Before you go for a test drive or even before you start looking at financing options, read our handy guide and checklist so you know what to keep in mind at each stage of the purchase process.

Buying a used car: what you need to know

Used cars are vehicles which are bought from a dealership or private seller and that are pre-owned. The conditions of used cars vary greatly, as 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 a new car, and you can sometimes find a good deal for a car in great condition.

Of course, there are risks that come with buying a car that has been used by someone else. Problems with cars may not be immediately obvious, and the car may even have a problem that the owner wasn’t aware of. So before buying a used car, you should do some research on the make, model and year of the vehicle and also know what questions to ask the owner. We’ll cover all of this in the guide and checklist below.

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 financing options available for used vehicles:

  • Fixed interest rate financing. Car loans in Singapore typically charge ‘flat’ interest rates, where the monthly interest payment is consistent over the loan tenure. The interest offered largely depends on the age of the car, purchase price and loan tenure.
  • In-house financing. Buyers with difficulties in getting a car loan approval (normally due to bad credit ratings or falling below the income criteria) from traditional banking channels may opt for in-house loans offered by some finance companies or dealership instead. As lenders consider such borrowers as high-risk, these loans usually come with significantly higher interest rates.
  • Balloon scheme financing. This type of scheme is often considered extremely risky. By excluding the minimum PARF rebate portion of your car loan in the instalments, your monthly instalments are much lower compared to a conventional car loan, which makes financing the purchase seemingly more manageable. However, to reap the benefits of this scheme, you must have driven the car until it’s ready to be scrapped to be assured of having the money to pay off the minimum PARF rebate at the end of the loan tenure. Otherwise, you’ll not only face higher penalties for early repayment but also have to keep paying off the loan’s higher interest rate.

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 go to find one. There are advantages and drawbacks to each option, so make sure you choose the one that sounds right for you:

  • Online. There are used car websites that are operated by online dealers where you can browse what’s available. You can find both licensed dealers and private sellers on these sites, so you can go with the seller who sounds best to you.
  • Trading and selling forums and websites. There are also sites or site forums where people try to sell their own cars and where you might be able to pick up a bargain. With a private car sale, there is no warranty and no cooling-off period that may be offered by licensed dealers, plus it is difficult to determine the reputability of the seller.
  • In the paper. Newspapers still have sections where people try and sell or trade, such as the classified ad section in The Straits Times. Again, as this is a sale with a private seller, you need to be more careful with your purchase.
  • Used car dealerships. If you would prefer to take a 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 terms of used car sales.

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

When you’re looking to buy a car, whether it be old or new, it can be tempting to buy the first car that you like. But a car is a large ongoing expenditure, and it’s important to consider your options before you make your final purchase.

Before you start looking for your car you need to 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 so it’d be easier to park? You should think about the main way you will be using your car 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 and how much you are willing to spend on a second-hand car.

When you start looking for your car you need to do your research. Start looking online and in newspapers, and visit a few used car dealerships. It doesn’t matter which seller you end up going with, because it’s important to understand the current prices in the market and what’s available to you. See what options you have for your budget and see the different types of cars that you are able to get. That way, when you find the car you want to buy, you’ll be able to know whether you are getting a good deal. You might also have some bargaining power when it comes to the purchase.

Used car buyer’s checklist

When you are inspecting vehicles or going for a test drive, use this checklist to make sure you note every aspect of the vehicle to help you make an informed decision.

On your test drive

  • Gears are smooth and can be engaged easily
  • Engine power is appropriate to the car’s size
  • Steering and the front tyres should be aligned in a straight line
  • Electronics and dials are fully operational
  • Temperature dials do not show any signs of overheating
  • Speedometer is functioning and displays your speed accurately
  • All lights are working properly
  • Engine starts properly without any prolonged cranking
  • No irregular engine noise
  • Checked the suspension and the transmission
  • Exhaust doesn’t spew any black or blue smoke
  • Brakes depress properly when applied and doesn’t sink too low
  • No vibrations or screeching noise when braking

The body of the car

  • Inspect the car in bright light to check for chips or variations in the paint
  • No sign of accident or rust damage
  • No rust blemishes on paintwork
  • No poorly aligned body panels
  • Intact door and boot seals
  • Upholstery is in good condition

The interior of the car

  • The seatbelts are in good condition and not tattered
  • Check the foot pedals and car seats for wear and tear
  • No cracked dashboard, missing knobs, handles and buttons
  • All lights inside the car are functioning
  • All electronics, including the air conditioning, the audio and the windows, are working

The exterior of the car

  • Take note of the engine number, chassis number and number plate
  • Checked the exterior of the engine
  • Checked the engine oil and the radiator coolant
  • No corrosion of the tubes and brackets

Documents you’ll need

The transfer of ownership must be made within seven days after completing the purchase at the Land Transport Authority (LTA) office in 10 Sin Ming Drive, or at any Electronic Service Agent (ESA).

Adhering to LTA regulations, buyers are required to pay a mandatory transfer fee of two percent of the assessed value of the car if it is less than 10 years old with a valid COE. You can check the transfer fees for individual vehicles here.

Along with the transfer fee, buyers must bring the following documents:

  • Ownership Transfer form (Completed and signed by the registered owner and new buyer)
  • Identification documents of both the registered owner and buyer
  • Original motor insurance certificate in the buyer’s name
  • Original and valid vehicle inspection certificate, if vehicle inspection is required prior to the renewal of road tax.

For more information on the required documents, please visit the One Motoring website here.

All the factors that come into play when you buy a used car can seem overwhelming, but you want to make sure that you’re buying a quality vehicle. Now that you know what to look out for and after you’ve done your own research on what cars are available, you can make an informed decision.

Picture: Shutterstock

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