What should you consider when buying a used car privately?

What should you consider when buying a used car privately?

There are many decisions you’ll need to make when you’re in the market for a car. And if you’ve decided a used car is the right choice for you, buying from a private seller may bring on a whole raft of other factors to consider. 

A private seller is the alternative to a car dealership, where an individual who wants to sell their car takes on the task themselves.

This can be a fairly seamless process if you’re purchasing off someone who has been diligent with looking after the car, has a logbook of regular services and hasn’t been in any accidents. The challenge comes with sellers who either haven’t kept up with servicing, or don’t have much documentation to prove they have.

Knowing what to look out for when buying a used car from a private seller can prepare you for the task of finding a reliable car, so you can steer clear of those who aren’t willing to be transparent about the car’s history.

Asking the right questions

Most used car listing websites have a fairly comprehensive template for sellers to use to detail all of the features and specifications of the car they’re selling. This can help you weed out the cars that don’t tick all the boxes on your list, but there will still be questions you might want to consider asking before scheduling an inspection with the seller.

Here are some questions to get you started, but be sure to jot down any that come to mind while you’re shopping around:

  • Is there documentation of the car’s servicing frequency and types?
  • Has the car been involved in any accidents?
  • Have any parts been replaced or repaired?
  • When does the registration expire?
  • Have there been any issues with the mechanics of the car?
  • Is there any damage to the car’s interior or exterior that may not be visible in the photos?
  • Is the car unencumbered or is there existing finance on it?
  • Can I test drive the car?

Have a good read of the listing as often many of these questions will be answered on there – but it’s never a bad idea to get further confirmation of the more important information.

Knowing what to look for

Once all of your questions have been answered, the next step in the process is to schedule an inspection with the seller to view the car in person and take it for a test drive.

Be sure to show up well prepared with a list of everything you need to assess, including the following:

  • Check that the odometer reading reflects what was in the listing.
  • Take a checklist of all the features and specifications that were listed and tick each one off as you view and/or test them.
  • View the car’s paperwork, logbook, current registration etc.
  • Look for any signs of inconsistencies between what the seller has told you and how the car looks and runs.

Keep in mind, some sellers may only allow you to test drive the car as a passenger, due to insurance restrictions. This isn’t necessarily a red flag, but it may be a good motivator to ensure you get a mechanic to have a look at it before you make the purchase.

Meeting the requirements set by your car loan provider 

Buying a privately owned used car on finance is more common than you might think. It works much the same as financing a used car from a dealership, but it’s important to fully understand what the loan provider’s requirements are before you get your heart set on your next vehicle.

The best way to get the ball rolling is to search and compare used car loan options and compile a shortlist of the products that appeal to you most. Next, find out the products’ individual lending criteria, particularly in relation to buying a used car privately.

Generally speaking, lenders will have a limit to how old the car can be at the end of the loan term, rather than upon purchase. This means that you could potentially get away with buying a slightly older car if you choose a shorter loan term. Just be sure that the repayments will work with your budget. You might like to consider using RateCity’s car loan calculator to get a repayment estimate.


Weighing up the pros and cons

Before you go ahead with your used car search, it’s worth weighing up the potential benefits with any possible disadvantages of buying from a private seller.


  • Including privately listed used cars in your search could open up more opportunity to find exactly what you’re looking for.
  • It could be easier to negotiate the sale price with a private seller than a car dealer, particularly if the seller wants a quick sale.
  • If you manage to find a car that’s in excellent condition, and has a responsible and transparent previous owner, you could end up securing a fantastic second-hand car with minimal risk involved.


  • You won’t have the opportunity to trade in your old car to get the price of the new car down.
  • You’ll miss out on the statutory warranty that dealerships are required to provide, potentially making the purchase a greater risk.
  • You’ll be responsible for all of the paperwork that needs to be completed upon purchase, such as transfer of registration.
  • Once you factor in additional expenses, such as the cost of having the car checked by a mechanic, the price you pay for the vehicle may not be any cheaper than if you had have purchased from a car dealership.

Other tips and tricks

  1. Do your research to ensure you know how much the car is worth and how it compares to other used cars of the same make and model.
  2. Consider looking up the car’s vehicle identification number (VIN) for information on its history. Searching the Personal Property Securities Register (PPSR) will allow you to ensure the vehicle is debt free, hasn’t been written off and isn’t stolen.
  3. Once you’ve made the decision to purchase the vehicle and have agreed on the purchase price, transfer the funds through a safe electronic facility, rather than paying in cash.
  4. Finally, remember to arrange insurance cover before you jump behind the wheel.

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Learn more about car loans

How much is your car worth?

If you already own a car, you could potentially bring down the cost by selling your car in the process. Before that happens, though, you’ll need to find out how much your car is worth.

One of the first places to find this value is to research the value of your current car, giving you an idea of roughly how much it’s worth in its peak condition.

There are plenty of websites that offer a free online valuation, allowing you to enter your car’s make, model, year, badge and description, with results listing a price guide based on both selling your car privately and through a dealership.

Of course, dealerships will try to profit on your trade-in by buying it for less than they can sell it, making it highly unlikely that you’ll get the same price selling a car to a dealer as you would selling a car privately.

However, private car sales can be costly and can take months to sell, making car trading more convenient with a guaranteed return, even if you may not be able to realise the total value of your car’s worth.

Remember that everything is negotiable. If the dealership is offering you less for your trade than you wanted, try to negotiate elsewhere to gain that money back. Start by negotiating on the price of the trade and then ask them if they can give you a further discount on your new car.

How much is my car worth?

If you own a car, it may be something that can help you bring down the cost of your next vehicle purchase through its sale. However, before you can do that you’ll want to find out how much your car is worth.

Your car’s worth can depend upon various aspects, including:

  • Age
  • Condition
  • Model and make

A great starting place for aspects of this includes websites that offer online valuations, allowing you to enter your car’s make, model, year, badge and description, with the listed results displaying a price guide based on both selling your car privately and through a dealership.

Both have pros and cons, as cars can be very profitable, something that will no doubt impact any chance you have to make the most of your car’s value upon sale. Dealerships will try to profit on your trade-in by buying it for less than they can sell it for, so you shouldn’t expect the same price selling a car to a dealer that you would necessarily get selling a car privately.

Can I buy a car as a student?

Buying a car is a huge financial decision, and shy of marriage and purchasing a house (or perhaps around the world travels), it may be the biggest financial decision you make. But if you’re looking at your empty pockets, don’t despair! Your dream of owning your own car could become a reality, if you look for and compare the right car loans for your circumstances.

What is a car loan?

A car loan, also known as vehicle finance, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Car loans can be used for both new and used vehicles.

How do you get a car loan?

There are four different ways you can get a car loan. You can go straight to a lender. You can get a finance broker to organise a car loan for you. You can get ‘dealer finance’ – which is when the car dealer organises a car loan for you. Or you can organise your own car loan through a comparison website, like RateCity.

Whichever method you choose, you will need to provide proof of identification, proof of income and proof of savings. So you may be asked for any combination of passport, driver’s licence, bank statements, payslips, tax returns and utility bills. You might also be asked to provide proof of insurance.

What is a secured car loan?

A secured car loan is a loan that is connected to a form of security, or collateral. Generally, the security for a car loan is the car itself. If you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

Where can I get a student car loan?

Student car loans are not a necessarily a product in and of themselves, but what you may be looking for is a guarantor car loan.

A guarantor car loan has a third-party act as a form of guarantee for your loan application, telling the bank or lender that if you default on your loan, someone will pay the loan repayments.

Going guarantor on a car loan is no new thing, and before internet-based credit scores, guarantor car loan applicants would apply for loans with a guarantor or property owner who could vouch for the person borrowing the loan.

To get a guarantor car loan, you’ll need someone willing to act as a guarantor for your car loan.

Can I get a car loan with poor credit?

Poor credit doesn’t necessarily mean you won’t be able to get finance for your car purchase, though your options aren’t likely to be the same as someone with good credit.

In fact, a number of specialist lenders exist offering car finance for customers with poor credit, able to provide access to bad credit car loans.

However having a history of poor credit will likely mark you as a potential risk to lenders, so your car financing needs could see higher fees and interest rates. Alternatively, consider a secured car loan, which is a type of loan that uses the car you purchase as collateral, reducing the risk.

Other options include getting someone close to act as a guarantor for your car loan, or to talk to a broker about a personalised rate specific to your circumstances.

How to apply for pre-approval of a car loan from RACV?

If you’re planning to apply for a car loan with RACV, the best way to start is by having a clear picture of your requirements. By getting pre-approval on your car loan, you’ll be able to go shopping for your new car with a definite budget that will help you narrow your search. Once you’ve decided to buy a car with the help of a loan, you may have even identified the type of car you would like to purchase, you can seek pre-approval on a car loan from RACV. 

You can apply for pre-approval by filling out a form online and uploading the relevant documentation regarding your identification, income, debt and credit history. Once you submit your application, RACV will review and verify the documents. If you meet their eligibility criteria, you will get pre-approval for the amount they are willing to lend to you. With this pre-approval, you can go car shopping with the confidence of knowing what you can afford.

How to find a great car loan

Historically, finding a great car loan would require excess research ranging from visiting an excess of websites or making phone calls, but technology has moved on. Using RateCity, Australia’s leading financial comparison service, you can check out great deals from a range of lenders on the one site.

To start, select the amount you want to borrow and the length of the loan, narrowing your search to show just fixed or variable interest rate results.

Once you’ve indicated your search criteria, you’ll see an immediate list of lenders, ranked by interest rate or application fees. You’ll also be able to view the monthly repayment amount for each result, helping you to know what you can afford.

Up to six products can be compared side-by-side, complete with more information about each car loan, giving you more information about your options.

When comparing your car loan options, it’s ideal to keep in mind some points find a great car loan for your needs. Consider the following:

  • Choosing a low interest car loan can reduce costs
  • Selecting an option with low fees and charges is ideal, because these can really add up
  • Be aware of penalties, such as early exit penalties if you pay off the loan sooner than expected
  • Consider the features that best suit your situation

There are many ways to ensure that you get a great car loan. Ultimately, you’ll end up with the best deal by doing your research and selecting the most suitable product for you.

What is a CHP?

A CHP, or commercial hire purchase, is an arrangement by which a finance company buys a car on your behalf. You get to borrow the car in return for making regular payments to the financier. Once the final payment is made, you take ownership of the car. 

How to get a chattel mortgage?

Both businesses and individuals may use a chattel mortgage, provided that the car is being used predominantly for business purposes. 

To apply for a chattel mortgage, you need to first consider your options and choose a suitable lender that meets your requirements. Once you have selected a lender, you can apply for the loan online by filling out a form. If the lender doesn’t offer an online application process, you can either call them or visit their nearest branch. 

After you’ve applied, the lender will ask you to supply documents that confirm your identification, income, job profile, etc. If everything is in order, most lenders will arrange the loan’s settlement, so all you need to do is pick up your car!

I’ve been denied a car loan before; can I still get car finance?

Even if you’ve been denied a car loan before, you might still be able to get car finance. The key is to make the right application to the right lender.

The ‘right’ application is one that makes you look like an acceptable risk, which might include things like improving your credit score, increasing your savings rate and accumulating a bigger deposit.

The ‘right’ lender is one that deals with borrowers like you. For example, while some car loan lenders only deal with good credit borrowers, there are others that specialise in bad credit or poor credit borrowers.

What is dealer finance?

Dealer finance is a car loan organised through a car dealer – as opposed to car loans organised by a finance broker or directly by the lender.