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Top 10 Tips for Used Car Buyers in Australia | Auto Expert John Cadogan

Transcript

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Buying a used car is more complex than most people think. Here’s how to sidestep the
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lemons, dodge the dogs and otherwise stack the deck in your favour.
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I’m John Cadogan from AutoExpert.com.au – the place where Aussie new car buyers save
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thousands off their next new cars. Hit me up on the website for that.
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More than one in every four used cars sold in Australia hides a potential problem. There
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are nearly 4.3 million vehicles listed on the official Personal Property Securities
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Register (where the vehicle forms the security over someone’s loan). The average cost of
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owning a lemon is up to $2000. Ouch. If you’re in the market for a used car,
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here’s how to stack the deck in your favour and avoid an administrative and/or financial
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disaster. In the spirit of full disclosure: This report
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was sponsored by CarHistory.com.au I’ve been recommending them for years. They’ve
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been kind enough to support the production of this used car buyer protection series.
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But the words and opinion here are my own – this is not a paid advertisement.
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CarHistory offers a simple, online report that takes just a few minutes and it costs
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less than $40. That’s basically all it takes to step out of the administrative minefield
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and drive off in a high quality used car that you’re certain is not a lemon. The CarHistory
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check even comes with a vehicle buyback insurance guarantee that essentially takes risk right
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off the table. For more detail on protecting your own best
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interests, visit carhistory.com.au/AutoExpert If you visit that dedicated AutoExpert landing
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page you’ll save 20% at CarHistory.com.au between now and 31st December 2017. You might
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as well tell your friends; they can save too. There are three major administrative speed
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humps on the road to avoiding a lemon. The car could be stolen, it could be a repaired
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write-off being sold under the radar, or it could be the security on someone’s loan.
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Izzy Silva is the General Manager of Consumer and Digital Marketing at CarHistory.
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Just to give you some flavour of how Australians research for cars, they spend nearly seven
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months researching for a holiday, but they spend 1-2 hours researching for a used car.
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A massive difference. A holiday is a week or two, a car is a lifetime investment potentially
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handing it down to your kids or family so when you consider those facts, consumers should
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spend a bit more time and effort researching a car. And as you mentioned, CarHistory.com.au
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is a comprehensive automotive bureau, so we provide the facts behind the vehicle.
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Bear in mind that looks can be deceiving – a great-looking car being sold by an apparently
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fine, upstanding seller can still be a lemon in one (or all) of these ways. And, if it
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is, this will be a disaster for you. The simple message here is: You can choose
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the vehicle with your heart, if that’s how you roll, but you have to buy it with your
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head. If the car has been stolen, or if the VIN
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code (that would be the car’s unique 17-digit alphanumeric serial number) does not match
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the engine number, rego number or information on the vehicle’s rego papers, these things
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are major red flags. Sometimes there’s a good reason for a mis-match.
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A different engine number might mean, for example, that the engine was replaced under
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warranty because of a manufacturing defect. However, in any of these cases where a mis-match
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is flagged, significant further investigation is required. Do not buy the vehicle until
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its status is adequately resolved. The easiest way to validate the VIN code and
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rego number, as well as get information on the vehicle’s previous sales history, evidence
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of odometer wind-back, rego status, safety rating and emissions, is at carhistory.com.au
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Repaired write-offs are a major pitfall. Vehicles in this category are often sold to unwitting
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buyers as if they have not previously been written off. And if you purchase such a vehicle
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it can be an administrative, as well as financial, nightmare.
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The research that we conducted at Carhistory.com.au showed that over 10 per cent of cars that
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went through a carhistory report last year in 2016 had a written-off status. Which is
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a big number, considering most people don’t even do one of these checks, so … one in
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four cars that went through a carhistory report check last year had a problem – encumberance
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or money owing being the biggest, closely followed by repairable write-offs.
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In some states, like NSW, repaired write-offs cannot be registered. Even if you live somewhere
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this is not a problem, a repaired write-off is always worth far less than an equivalent
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car that has not previously been written off. In general, factory warranties are cancelled
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if the vehicle is written off, and the vehicle’s insurance status changes as well. So in many
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ways, a repaired write-off is significantly less car than you may have been expecting.
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The CarHistory report neatly avoids the extreme headache of unwittingly buying a repaired
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write-off. And if you do buy one of these repaired write-offs, at least you know what
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you’re getting, up front. It also details the vehicle’s insurance claims history.
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With 4.3 million vehicles listed on the Personal Property Securities Register (the PPSR – formerly
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known as ‘REVS’) there’s a significant risk, if buying privately, that you could
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end up with a vehicle that forms the security on the previous owner’s loan. (This is known
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in the business as an encumbered vehicle.) This is a disaster – for you. If the previous
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owner defaults on the loan, the financier will repossess your car, and there’s essentially
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very little that you can do about it. CarHistory also tells you if the vehicle is
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encumbered, and if it is: get expert advice from your solicitor or accountant about how
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to discharge the encumbrance in the course of buying the vehicle.
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If the vehicle you’re looking at passes the administrative health checks at CarHistory
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it’s time to get your trusted mechanic (or the motorists’ association in your state
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– NRMA, RACV, RACQ, etc.) to give that vehicle a thorough physical.
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An independent expert can easily assess the vehicle for physical red flags – evidence
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of abuse or imminent failure that might cost you thousands of dollars to repair. And they
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can also review the vehicle’s service history (and bear in mind that ongoing factory warranty
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coverage depends upon the vehicle being properly serviced).
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And finally, an independent expert can assess the vehicle for evidence of dodgy crash repair
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– perhaps from a repair that did not involve an insurance claim.
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If anything is flagged at this point, you might choose to walk away from the vehicle
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and buy one in better order instead, or use the defect as a bargaining tool to negotiate
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the price down. That often works surprisingly effectively.
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Some people know exactly what they want, and most people have some idea. It might be a
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sedan, hatchback, SUV, ute, sports car, whatever. However, the market is drowning in choice,
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and it is often difficult for a non-car person to get down to a viable short-list, using
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rational criteria. In general, you’re looking for the newest
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example of the kind of car you want, with the fewest kilometres on the odometer – balanced
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up against what you can afford to spend. There are some important considerations to
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help you refine your choice. Safety is a tremendously complex issue. You’ve
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got so-called ‘active’ safety systems (crash avoidance technology) and also ‘passive’
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safety systems (which are designed to protect you during a crash). Active safety includes
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things like stability control and ABS, while passive safety includes crumple zones, airbags
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and seatbelt pre-tensioners. Things like that. All of these things matter. Thankfully, however,
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this complex issue is made digestible thanks to ANCAP, the Australasian New Car Assessment
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Programme. The bottom line – aim for a five-star safety rating if you possibly can. Most vehicle
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categories have been more than adequately served with a range of five-star vehicles
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for more than 10 years now. Choosing a five-star car maximises your chance
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of not becoming a grim statistic if you crash. The CarHistory report also includes information
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on the vehicle’s safety rating. Cars cost money to own and run – it’s that
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simple. It’s easy to assess the likely fuel economy of any car on your short list at the
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Federal Government’s GreenVehicleGuide. You’ll get official fuel consumption and
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CO2 emission data, as well as estimated annual fuel cost.
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(Just bear in mind that these numbers are based on official lab tests, and real world
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consumption for most people is typically about 20-25% higher than the lab test numbers suggest.)
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Check the service interval, too. Some brands (like Toyota and many Subarus in the used
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market) demand servicing every six months or 10,000km while other brands (like Hyundai
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and Kia) have moved to 12 months or 15,000km. If you’re a low-mileage driver annually,
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it could easily cost you twice as much to service a vehicle with a six-month maximum
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service interval. (And bear in mind that servicing is based
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on time or distance – whichever occurs first.) CarHistory also includes information on the
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vehicle’s fuel economy and emissions. Insurance costs can vary widely between different
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vehicles and different drivers. It’s a disaster to buy the ‘car of your dreams’ only to
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discover you can’t afford to insure it. Always get quotes before you buy, right, to avoid
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this pitfall. Most people use online classifieds to do their
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ballpark pricing research. I prefer Red Book – research is free (if you use the ‘research’
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tab) and you get both trade-in and private sale price estimates. Just bear in mind that
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Red Book’s price estimates are often a little optimistic, and actual transaction prices
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are often a little lower than Red Book suggests. Interest rates on car finance vary widely
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across the market, and you owe it to yourself to shop around, because considerable savings
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are often available, and this can boost your buying power significantly. Do not just blindly
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accept the dealer’s first offer, or the bank’s – you’ve got to shop around.
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Ultimately the rate you pay depends on the financier’s risk assessment of you. Clients,
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generally, with good jobs, strong credit ratings, and asset backing – they tend to enjoy the
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lowest rates, and clients with poor references here tend to pay much higher ratest.
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Lastly, remember that trade-ins are all about convenience – they’re a quick, easy way to
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dispose of your old car. A trade-in will never yield the highest return on you old car. If
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you want to maximise the return, sell your old car privately. Just bear in mind that
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this can be frustrating and time-consuming as well, and you’ll have to negotiate face-to-face
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with the buyer, which many people, frankly, do not enjoy.
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I hope this helps you avoid parking a lemon in your driveway – plenty of people get themselves
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in that position, but you don’t have to be one of them. I’m John Cadogan. Thanks
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for watching.

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