Purchasing a reliable second-hand car which won’t break the bank can be tricky, which is why we’ve compiled this checklist to simplify your purchase and avoid being ripped-off.

Set your budget

It’s critical to set a budget for how much you can afford to spend. Remember that buying a car carries more than just the price tag; you will have to factor in registration costs, insurance costs and regular maintenance and servicing costs.

If you’re planning on financing your car, it’s important to make sure you’re getting a competitive interest rate and be aware of any fees that could apply. Solution? Be finance savvy- ask lots of questions surrounding the costs of the loan:

• Are there any early payout fees?
• What are the set up/ongoing costs?
• What is the comparison interest rate?

Remember: The comparison rate is a method of standardising the true cost of a loan. It can help you see what the actual costs are once you include all of the fees. It’s a convenient way for you to compare credit providers on an even playing field.

If you're looking to purchase a vehicle that is up to three years old, check out our new fixed car loan. It lets you secure a spectacularly low rate with no ongoing fees and the flexibility to redraw and make penalty-free extra repayments. 

Beware of dealer finance!

Zero per cent finance might sound enticing, but you should beware of getting your finance through a dealer. Often the interest will be accounted for in the price of the vehicle, so the dealer isn't likely to be flexible on the price, or very generous with a trade-in offer.

Research is key

Have a good look at what sort of car you can get for your set budget. You can start by looking at second-hand car sales sites or in the local paper to get an idea of a model’s current market price. It’s a good idea to check this price against industry standardised data sites to avoid paying too much.  If you find a used car which is much lower than the market suggests, ask the dealership or seller why. If it seems too good to be true, it probably is!

Did you know? MOVE Bank has partnered with Car Search Brokers Australia to help you find the car you want, at the right price, with minimal hassle and at no cost! You just tell them the type of car you're after and your budget and they’ll organise a roadworthy inspection, your trade-in and even negotiate with the seller for you.

Find the right car and contact the seller

When searching for a second-hand car, most people will visit a car dealership, or they will head online to purchase directly from the owner. When purchasing a vehicle through private sale it is important to contact the seller... and when you do, ask lots of questions!

• Why are they selling the car?
• Has it ever been damaged?
• What condition is it in?
• Have they obtained a Road Worthy Certificate?
• How long have they had the vehicle?
• Do they have records of regular services?

When it comes time to have a look at the vehicle, make sure you take a printout of the seller’s advertisement so you can double check that the details they have provided are correct (such as the odometer reading and registration due date).

No matter how legitimate you think the seller is, you should always verify the history of the vehicle to ensure it is not stolen, encumbered by an outstanding loan or even a repaired write-off.

Checking and test driving the car

An important part of purchasing a car is having a look at the vehicle and taking it for a test drive. Before you even think about getting your heart set on it, here is a quick checklist of things to look for:

Outside:

• Look over the paintwork to ensure there are no bubbles or colour discrepancies. If there is, this generally indicates rust.
• Check under the car for oil leaks.
• Check that all panels fit together properly, such as the doors, bonnet, boot and windows. If they are hard to open or close this could indicate that the car has been in an accident.
• Check all of the tyres to ensure they have enough tread (between 3-4mm) and look for uneven wear which can be an indicator of issues with the suspension or steering.

Under the hood:

• Look at the dipstick. Milky or grey oil is an indicator of severe engine problems.
• Check that the radiator cooling fans /battery mounting platforms for any corrosion or other damage.
• Remove the radiator cap and check the coolant. Ideally, it should be clean and brightly coloured. If you see any oil in the coolant, this is another indicator of severe engine problems.

Inside:

• Make sure the upholstery, carpets and seatbelts are in good condition.
• Make sure that all the lights and accessories are working properly.
• Check that there is a jack, tool kit and spare tyre in place and in good condition.

Check the engine:

• With the bonnet open, start the engine and watch for any exhaust fumes when starting the engine.
• Listen for any excessive or irregular noises such as rattling or knocking in the engine.
• Make sure that the engine runs smoothly when accelerating and decelerating on flat roads and uphill.
• Watch the dashboard for any warning lights

Take it for a test drive:

• On a straight road, ease your grip on the steering wheel to see if the vehicle pulls to one side. If it does, this could be an indicator of misaligned steering.
• Check the brakes a few times- the brake pedal should feel firm and not squeak.
• Make sure the gears change smoothly up and down.

This list is not comprehensive but is definitely a good start [1]. If you know of any friends or family members who know their cars, it might be a good idea to bring them along to give you a hand. If you’d feel more comfortable having a professional looking over it, it is a good idea to get the vehicle checked comprehensively.

Negotiating Price

Quite often when a car is advertised there is often scope to negotiate. If you find any faults in the car or if there isn’t much time left on the registration, you can use this to negotiate the price with the seller. Ask the seller what their best price is, make a lower offer and wait for their response. They are either going to refuse, accept your offer or name another price slightly closer to yours- it’s a win, win!

Paperwork, payment and insurance protection!

So you’re on the home stretch, but that doesn’t mean you should rush through this last step.

Make sure all of the paperwork is in order, and ensure you have the original versions of everything from the registration papers, logbook and service history. If you’re going through a dealership, take your time to read the contract they have provided and question anything that you don’t understand or is unclear. When making the payment, ensure you get a transactional receipt with the seller’s full details on it.

Before you put the keys in the ignition and drive away, make sure you have the vehicle insured! We’ve all heard horror stories of people buying cars and having an accident on the way home, so make sure you protect your wheels on the day you take ownership of the vehicle.

Did you know that you can pay fortnightly at no extra cost when you purchase your car insurance through MOVE Bank?

Click here to get a quote.

Insurance issued by Insurance Australia Limited ABN 11 000 016 722 trading as CGU Insurance. Any advice is general only. Consider the relevant PDS available from cgu.com.au to see if a product is right for you.

This blog post is for general information purposes only and is not intended as financial or professional advice. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product or other professional advice. You should seek your own independent financial, legal and taxation advice before making any decision about any action in relation to the material in this article. Railways Credit Union Limited trading as MOVE Bank ABN 91 087 651 090. AFSL/ Australian Credit License number 234 536 | ABN 91 087 651 

[1] https://www.choice.com.au/transport/cars/used/buying-guides/cars