Second-hand smarts: Tips for buying a used car

Second hand smarts Tips for buying a used car

By Amy Bradney-George
14 January 2009

Used cars can be a financial blessing or a beast of burden if a personal loan is taken out for a dodgy deal. But insurance companies like the National Roads and Motorists’ Authority (NRMA) and the Royal Automobile Club Queensland (RACQ) report that a second-hand car is not a problem, so long as you know what you’re looking for.

As for the safety of the actual cars, RACQ vehicle technologies manager Steve Spalding has said research has found there are safe cars on the used market.

“The latest Used Car Safety Ratings results show second-hand vehicles providing a high level of crash protection are available at affordable prices. Safety just needs to be factored in when making the purchasing decision.”


Image by Dr. Keats

To help make the most out of your personal loan, here are some tips to guide you to a safe second-hand car purchase.

1. Money matters

The price range you settle on will help narrow down the types of cars you’re looking for, and also speed up the process of getting what you want. It’s worthwhile arranging a car loan or personal loan before looking at cars to cement your financial decision. Plus, good deals will be snapped up fast and if the money’s already available then securing the deal will be a lot easier for everyone.

2. Shop around

Check out a few different places before settling on a car. Used car dealerships, newspapers, trade papers and websites provide a good cross-section of the deals available and you’re bound to find at least one car you like by looking around. Searching in a variety of different places will help you develop a price gauge of what’s on the market and vehicles that represent true value for money.

3. Try before you buy

Always go to inspect your car in person and take it for a test drive before buying. Sometimes a good deal can be marred by rust, broken lights, bad brakes, fuel consumption or any number of other problems. Many insurance companies offer vehicle inspection services, and it’s definitely a smart move to take a friend along with you for an extra set of eyes.

4. Hidden history?

If a prospective car seller doesn’t have the vehicles history on hand, make sure you do a vehicle check before signing away. Stolen or damaged cars can lead to lost money and legal problems down the track. Further problems could arise if the seller still owes money on the car when you buy it. A number of insurance companies, auto mechanics and online services provide reliable vehicle checks and it’s always better to be safe than sorry.

5. Modifications

Car enthusiasts might modify a car long before they think of selling, but sometimes these changes are not legal. In the last few years there have been a number of changes to what features are legal on a car, so something acceptable five years ago may now be considered a dangerous addition. Don’t be afraid to ask the seller about modifications and check the state and national laws for any alterations.

6. The contract

Ask for a copy of the contract so that you can go through it thoroughly before agreeing to the terms and conditions of the sale. A car is an investment and it’s important to read and understand all legally binding contracts before you invest in anything of value.

7. Review registration papers

Check the registration to see when it expires and which state it is registered in. This information may be in the listing details for a car, but double-check anyway for surety and peace of mind. It’s no use driving a Victorian-registered car in New South Wales if you don’t have the proper paperwork filled out.

8. Car servicing

Regular servicing is an important factor in the longevity of any vehicle, old or new. Finding out how often a car has been serviced will not only indicate whether there is likely to be structural and technical problems, but could also suggest how regularly you need to service the car. This information should be in an owner’s manual, but if there isn’t one available for the car then the NRMA website suggests a service every 6 months, or every 10,000 kilometres (which ever you reach first).

When purchasing a second-hand vehicle figure out what works best for you. Always shop around for the best deals and keep tips like these in mind for more financial safety in your buy.

Related Links

Did you find this helpful? Why not share this article?



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy


Learn more about personal loans

Are there low doc personal loans?

Self-employed borrowers may be eligible for low doc personal loans, which require less documentation in their application process than many other personal loan options.

It’s important to remember that though low doc personal loans may require less paperwork, you may need to provide additional security, or pay a higher interest rate.

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.

If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.

Will comprehensive credit reporting change my credit score?

Comprehensive credit reporting may change your credit score, either positively or negatively, depending on an individual's situation.

Under comprehensive credit reporting, credit providers will share more information, both positive and negative, about how you and other Australians manage credit products. That means credit reporting bureaus will be able to make a more thorough assessment of everyone’s credit behaviour. That will lead to higher scores for some consumers and lower scores for others.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term

Can students with no credit history get loans?

It is possible for students with no available history of borrowing or managing money to get a personal loan, though it may be more difficult as well as expensive than for borrowers with a good credit history.

Having no credit history means having no credit score. While many lenders may consider having no credit score to be better than having a bad credit score, they may still consider it riskier to lend to an unknown borrower and may charge higher interest rates or fees than to borrowers with good credit scores.

Can you pay off a quick loan early?

Many lenders will allow you to make extra repayments onto a quick personal loan when you can afford them, or even exit the loan early, which can help reduce the total interest you are charged. Be sure to check your quick loan’s terms and conditions, as some lenders charge early exit fees for paying off a loan ahead of schedule.

Is it hard to improve your credit score?

It can be hard to improve your credit score, as it usually requires sacrifice and discipline, but hard doesn’t necessarily mean complicated. Some simple ways you can give your credit score a boost include closing extra credit cards, reducing your credit card limit, pay off any loans and make loan repayments on time.

As a general rule, the lower your credit score, the more remedies you can apply and the greater the scope for improvement.

Can I get a $2000 loan on Centrelink?

If more than half of your income comes from Centrelink benefits, it may be more difficult to have a $2000 loan application approved. Many lenders will check if you can afford a loan’s repayments on the income from your job before they’ll approve an application, and many won’t count Centrelink payments when assessing your income for this purpose.

Some lenders may offer $2000 loans to borrowers on Centrelink – consider contacting potential lenders to check before applying.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

What can I use a bad credit personal loan for?

Generally, bad credit personal loans can be used for the following purposes:

  • Debt consolidation
  • Paying bills
  • Buying vehicles
  • Moving expenses
  • Holidays
  • Weddings
  • Education

Some lenders restrict how their bad credit personal loans can be used as part of their commitment to responsible lending – be sure to check before applying.

What documentation is needed for a self-employed personal loan?

Personal loans may require a borrower to provide proof of identity, proof of residence, details of any other outstanding loans (including credit cards), details of assets they own (e.g. savings, car, property), and proof of income.

While borrowers in full-time or part-time employment can often provide payslips and similar documents to prove their income, self-employed borrowers may need to provide other documents, such as bank statements or tax returns, to demonstrate that their income can cover a loan’s repayments.

Can I get a $4000 personal loan if I’m unemployed or on Centrelink?

Before most providers of personal loans or medium amount loans will approve an application, they’ll want to know you can afford the loan’s repayments on your current income without ending up in financial stress. Several lenders don’t count Centrelink benefits when assessing a borrower’s income for this purpose, so these borrowers may find it more difficult to be approved for a loan.

If you’re unemployed, self-employed, or if more than 50% of your income come from Centrelink, consider contacting a potential lender before applying to find out whether they accept borrowers on Centrelink.

Which lenders offer bad credit personal loans?

Several dozen lenders offer bad credit personal loans in Australia. These are generally smaller lenders that aren’t household names.

Can I get a personal loan if I receive Centrelink payments?

It is hard, but not impossible, to qualify for a personal loan if you receive Centrelink payments.

Some lenders won’t lend money to people who are on welfare. However, other lenders will simply consider Centrelink payments as another factor to weigh up when they assess a person’s capacity to repay a loan. You should check with any prospective lender about their criteria before making a personal loan application.