We’ve all heard the nightmare stories from friends and family members who have purchased a used car that turned out to be a lemon. Engine fires, sleazy salesmen and breakdowns in the middle of nowhere; it’s what we all try to avoid when purchasing a vehicle and unless you know your way around a crankshaft and piston ring, you will need to do some research to ensure you don’t end up with a bomb.
Giving the ol’ girl the once over
Avoiding a lemon is not as difficult as it seems if you understand what you are looking for. Once you have decided on the car you would like to purchase, take your time to inspect the physical aspects of the vehicle.
- Check the panels, doors, windows or boot lid. If they don’t seem to fit properly, or if they won’t open and close, it’s possible the car has been in an accident. If any areas look suspicious, try using a fridge magnet to check for body filler — the magnet won’t stick to filler
- When looking under the bonnet, check the dipstick for grey or milky oil to reveal any serious engine problems.
- The coolant tank should reveal a brightly coloured and clean solution. If there is oil present in the coolant, this may indicate a problem with the engine.
- Finally, check the radiator cooling fins and the battery for corrosion and other damage.
Next, start the engine and search for evidence of exhaust fumes. If you see blue smoke, this may be caused by burnt oil in the engine, indicating a potentially serious problem. Furthermore, listen for any irregular running noises, rattling or knocking and check for any signs of oil or coolant leaks.
Take it for a spin
Ideally, no inspection should be completed without a test drive. It is not only important to letting you know how the car drives, it will also reveal any problems with the engine, electrics, steering and brakes.
Keep in mind that in NSW, QLD and Victoria, private sellers must provide the buyer with a valid certificate of roadworthiness (also known as a pink slip) at the point of sale.
- Listen to the engine. It should run smoothly when accelerating and decelerating both on flat roads and uphill
- The gears should be changing smoothly and pay attention to any rattling or other body noises, especially when driving over speed humps.
- Watch the dashboard for any warning lights, and keep an eye on the temperature gauge
- When driving in a straight line, the car should not pull to the side. If it does, this can indicate worn suspension or misaligned steering
- At the same time, check the brakes. Hit the brake pedal a number of times, to ensure it is firm
Trust me, I’m a salesman!
There are a number of cowboys who will try to sell you lemon or stolen vehicle and the old adage – ‘Buyer Beware’ is applicable, whether you are purchasing from a dealer of a private seller. Always check that the vendor is actually the owner of the car by comparing their driver’s licence details with those on the registration papers.
In addition, if you are purchasing from a private seller, check whether there’s any money owing on the car by visiting Australian car checking websites such as www.revscheck.com.au, www.pprscheck.com.au, and www.checkvin.com.au.
Other details that require verification is the Vehicle Identification Number (VIN) and date of manufacture, as well as the engine number and the number plates. Compare these against the vehicle’s registration papers. If any of the information doesn’t match, ask for an explanation. It could mean the car is stolen or, in the case of the engine number, the engine’s been replaced without notifying the registration authority.
In contrast, purchasing a used car from a dealer is usually a more secure process. Used car dealers in Australia must guarantee that there is no money left owing on the car and in most states and territories, they must also provide a statutory warranty on certain used cars. Be aware that this warranty often excludes parts such as the radio, air conditioning or battery, so make sure you clearly understand what’s covered and what isn’t.
That said, purchasing from a dealer can be more expensive than buying privately but if you trade your old vehicle into the dealership, you can potentially offset the additional cost.
Once you are satisfied that the paperwork is correct, the car is in good nick and drives well; your next port-of-call should be to your financial lender to secure a car loan.
Is your loan the right loan for you?
Taking out a loan to purchase a used car in Australia is extremely common (though not necessary if you have the cash), and usually, obtaining finance is a straight forward process, if you have a good credit record and the correct documentation. When considering a car loan, there are two basic types to choose from – secured and unsecured loan and the amount of interest you will pay on the loan depends on which one you choose.
A secured loan is where the lender holds security over one of your assets, such as your home or car, until you’ve paid off the loan. Having this security normally means you will pay a lower interest rate but be aware, borrowing against an asset such as your home means the lender has the right to take your asset should you default on the loan.
An unsecured loan is where the lender has no security from an asset. This usually means that unsecured loans carry a higher rate of interest. If you default on an unsecured loan, it can go one of two ways: the lender will either pass it off as bad debt or they may take action against you to recover the debt and even apply to declare you ‘bankrupt’ if the outstanding sum is over $5,000. Either way, the result can financially set you back many years and before signing on any dotted line, ensure you can meet the minimum loan repayments. In addition, be aware of lender application and account keeping fees as these additional charges can also impact on your repayments.
Shopping around on the internet is a great way to compare the types of loans and interest rates available on the market. In fact, using comparison websites to compare different personal loans from various lenders can potentially save you hundreds of dollars in interest over the loan term.
The Internet has also made obtaining a personal or car loan very easy. Many financial institutions now have the ability to pre-approve your loan online in just fifteen minutes depending on your personal situation. To obtain pre-approval, nearly all lenders will require that you supply:
- Proof of identity – such as Medicare card, birth certificate, passport and driver’s license
- Proof of employment – such as payslips and contracts
- Proof of income – including assets such as a investments
- A good credit rating or a declaration that you have not been bankrupt within the last seven years
If you are unsure of what documentation you need, speak to your lender. They can guide you through the process to get you behind the wheel faster.
Fiona Hamann is the senior PR manager at Aussie. She is passionate about all facets of communications including PR, writing, editing, website content, new media, crisis and issues management and branding in the finance industry – home loans, personal loans, credit cards, and insurance.” Just remember if you do not deal with the right salesperson, you may end up with more than a lemon, you will feel like you just drank pure lemon juice.