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Written byShaun McGowan
If you are thinking about buying a car privately, here are the things you need to be aware of.
Buying a vehicle through a private sale is very different from getting a car from a certified dealer for one main reason:
If you buy a car that’s already under finance (i.e. someone is still paying off the car through their own loan) you will also assume responsibility for the outstanding amount.
This might sound very doom and gloom, but it’s often a reality check to make sure you don’t get taken advantage of.
So, with the initial warnings out of the way, let’s talk about how you can get a good deal buying privately
To avoid fraudulent activity during your purchase, you’ll need to learn how to protect your own interests throughout the private sale process.
The three most common misrepresentations by private sellers are:
However, it’s simple to protect yourself as a buyer if you are comfortable asking some questions and inspecting the vehicle before you hand over any money.
First, get a professional, independent (i.e. not the seller’s best mate) mechanic to inspect the vehicle and also look for evidence of dodgy crash repairs.
Second, apply for a CarHistory report. Go to www.carhistory.com.au
A CarHistory report is an easy-to-understand vehicle report and can be obtained for $37 online.
This vital, $37 report will include:
You can buy a CarHistory report on your smartphone while inspecting the vehicle at the seller’s premises - it’s that simple and instant to obtain!
Sometimes, you might discover that the car is ‘encumbered’ - basically, the person selling it hasn’t repaid their car loan, and you **could **find yourself responsible if you buy it.
It just means that your lender will need to pay out the vendors existing loan. You will still be able to purchase this car. Your CarHistory report should tell you whether the car is under finance or not.
Here is how that process would work
In this situation, never pay the seller the full sale amount direct. If the seller decides to not repay their loan, the car you have purchased may be repossessed to cover the debt - leaving you without a car, and a debt of your own to service.
In some situations, the seller of the vehicle might ask you to make a deposit while you’re waiting to get approved for finance.
You’ll have two options here:
There is no ‘one size fits all’ answer to the question of how much you should pay.
If you have requested a CarHistory report, the estimated value of the vehicle will be included in the report.
Another good vehicle price-estimation resource is www.redbook.com.au
Redbook pricing is for standard vehicles in average condition for their age and with average kilometres travelled.
Also take into consideration things like modifications, mileage, what the car was used for, and the overall condition of the car when comparing it with other listings.
First, you’ll want to find a vehicle. Although we’re not talking about loans just yet, there’s one quick thing you should know:
Keep this in mind when looking for your car, because if you want the best rates or the lowest repayments on a loan, you’ll want to look for vehicles under 7 years old - the newer the better!
Now that we’ve covered that, here are some popular places to find and buy a car privately:
Once you’ve found a car that you like and fits your budget, you’ll need to do two things:
"Hey I’m Money Matchmaker™, I have a team of wizards making me super smart. When you take my quiz, I use your answers to check against all our lenders at once. I’m harmless, I don’t impact your credit score and I'll use the information to help my team of loan experts find you all the loans you're eligible for."
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
*Information about comparison rates Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan. The comparison rate is based on an unsecured fixed rate personal loan of $30,000 over 5 years. WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.