10 Nov Buying a used car from a private seller: 3 BIG questions answered

Buying a used car from a private seller can feel risky and lenders feel the same way. While there are risks associated with any large purchase, we believe buying from a private seller makes sense, and when done right can be a fulfilling experience and one that saves you a considerable amount of money.

There are 3 big questions that get asked often, let’s dive in to alleviate some of the risk of buying a car from a private seller.

Question 1: Is a used car from a private seller really cheaper than from a dealer?

The short answer is, Yes. In most cases, you will get a lower price when you buy a used car from a private seller.

The reality is when you buy a used car from a dealership you face additional costs like advertising costs and commission, these extra costs do not occur when you buy privately. But,  it is important to note, what you save in money, you often give up in things like a warranty and Fair Trading protection.

A good idea:
Before buying from a private seller or dealer it is a good idea to do your research and get price estimates from both so that you can weigh up the cost savings versus the added protections before making your final decision.

Question 2: Can I get a car loan for buying a used car?

Yes, many lenders will allow you to borrow money to purchase a used car from a private seller.

Getting a car loan for a used car from a private seller is a similar process to buying from a dealership however can sometimes cost slightly more due to the banks requirement to undertake additional checks on a used vehicle from a private seller.

All these checks and balances are handled for you and happen behind the scenes, however banks will build the cost of this into their pricing to make sure they are covered.

Generally speaking you will still have two loan options – either a secured loan or an unsecured loan. The two options depend on the age of the car, generally the preferred loan is a secured loan which is available on cars within a certain age limit. Unsecured loans are available for older vehicles however may attract a slightly higher interest rate because the bank is taking on more risk lending unsecured.

What lenders will need:
More information is required from the lender to mitigate the risks, ensuring the person selling the car is the owner. The information required varies lender to lender but it can include,

1.  The current registration certificate
2.  The vendors drivers license
3.  Proof of vendors banking details
4.  Current financier payout letter (if applicable)
5.  Vehicle inspection report
6.  A copy of the sale agreement between the vendor and purchaser

It is a lot to think about! We are here to help!  Each lender is different so it is always a good idea to find someone that understands the differences between lenders and has access to a panel of lenders to ensure you can get the best deal for yourself. Allowing Finestream to deal directly  with the lender and the purchaser ensures  a seamless and worry-free experience.

Question 3: What checks do I need to do when buying a used car privately?

There are plenty of things you can check before and after you check out the vehicle you intend to buy. And it could end up saving you time and money. These include:

• Checking the vehicle registration: This is free and will include the rego expiry date, if its been suspended or cancelled, any restrictions, any concessions and the CTP insurer and policy expiry date.
• Getting a vehicle history report: For a small fee, this report will show if a vehicle has been written off, been stolen, the number of registered operators, the vehicle’s past use (taxi/hire car), the vehicle’s first registration date.
• Checking the Personal Property Securities Register (PPSR): This is a national online register that allows you to register and check security interests in personal properties – such as cars, boats and artworks.
• If you have a P1 or P2 licence making sure the car isn’t restricted: This can be done online for free. Essentially, you want to make sure that the vehicle isn’t high performance, doesn’t have an unapproved modified engine or a power to tare mass ratio greater than 130kW per tonne.
• Checking the details online matches the car: It’s important to note if the features and registration information provided in the ad is correct. When you see the car, ask for documentation and test any features to make sure they are functional.
• Asking a mechanic to check the car: It’s always a good idea to have a professional look at a used car when you buy it privately. While this may cost you a few hundred dollars, there may be a technical issue you don’t pick up on. This will save you money later down the track in repairs.

Contact us to learn more about your financial options when buying from a private seller. We can make private sale vehicle purchasing a safe and seamless experience, removing the inhibitors that cause a lot of people to go through a dealer and pay more.