5 common mistakes when taking out a used car loan
When it comes to buying a car, a bit of preparation is definitely your best friend.
This is even more important when you’re shopping second-hand, because you're likely to be skipping on the manufacturer warranty that comes with a new purchase.
Here's how to dodge some of the most common mistakes that people make when buying a used car.
Mistake 1: Not doing your research
It's a wide world of cars full of confusing jargon, and plunging into it without any sort of guidance or reference point is a sure way to get confused. You'll quickly find yourself comparing apples with oranges while trying to steer clear of the lemons. It's a tricky business.
Consider your needs and habits when thinking about the sort of car you want. Do you need a four-wheel drive for off-road camping adventures, or just a small compact for the daily commute to the office? Two-door or four? Manual or automatic?
Once you've narrowed your focus, you can begin to compare similar models. This will give you a rough idea of cost that you can use as the basis for working out how much you want to spend.
Mistake 2: Not thoroughly checking the car
If you've found a car that looks promising, inspecting it before purchase is a given. But do you really know what you're looking for? If you're not mechanically-minded – and there are plenty of us who aren't – enlist a friend who knows a thing or two about cars to come to view it with you.
Look for wear and tear to the interior, rust, as well as cracks or chips in the windscreen. All small signs of negligence that may indicate that the vehicle hasn't been properly maintained. If you're close to making a purchase, you might want to consider paying for an inspection by a licensed third-party mechanic. The cost outlay may be worth it for peace of mind alone and it could potentially save you thousands of dollars in the long run. Think of it as an investment.
Mistake 3: Not checking the paperwork
Ensure you ask to see the maintenance history of any car that you're considering buying. The vehicle should have been regularly serviced by a qualified mechanic according to the manufacturer's guidelines. If you're buying for a private seller then you won't have a warranty to fall back on in the event that something does go wrong, and a vehicle's history is a good indicator of the likelihood of things going awry. If there's no recorded logbook of maintenance, pass on the sale. It's just not worth the risk.
Finally, check the car's VIN number and cross-reference that with Australia's Personal Property Securities Register. This will help you to work out important information about the car, including its registration status, whether it's reported as stolen, whether it's previously been written off in an accident, and if there are any outstanding debts against the car. All vital info, let’s be honest.
Mistake 4: Being afraid to ask for a better price
Negotiating a sale price can be an intimidating activity, but it's part of the process of buying second-hand. Again, set a budget and stick to it. Calculate how much you can comfortably spend on your used car loan, if you need one, and don’t exceed your maximum.
If you're not comfortable negotiating face-to-face, don't be afraid to make offers through email. Mediating tough conversations via a screen can help reduce the emotional pressure of the situation and enable you to stick to your guns.
Mistake 5: Not factoring in additional costs
While you might be focused on the sale price (and that's understandable), it's not the only cost involved with car ownership.
Remember, cars sold in Australia, including used vehicles, are subject to stamp duty on top of sale price. Then there are the ongoing costs of insurance and maintenance that need to be considered.
If you’ll need a used car loan, make sure you include these costs in your finance calculations, because one-offs can quickly add up. You might also want to spring for a professional clean. Maybe you need to add roof racks, or new car mats. So make sure your budget can accommodate all these extras.
Need a little more cash for your new wheels? Take a look at Latitude Car Loans.