Buying a car

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When buying a car, there are more costs to consider than just the car itself - you'll also have to pay for, petrol, registration, insurance, parking, tolls and other unexpected costs.

Topics on this page include:

> Research
> Get the best deal
> Who to buy from
> Inspections
> Insurance
> Types of car insurance
> Financing
> Links

Reseach

Research cars on the internet and in newspapers. Compare prices and details of the type of car you want. Get an idea of the sort of price range you can expect by looking in local newspapers, the Melbourne Trading Post or the Glass's Guide, all of which list current market values for most cars, according to their condition.

Ads for used cars published by licensed motor car traders are required to contain certain information including:

  • The letters LMCT and the licence number of the trader (if the ad is for a licensed motor car trader)
  • The price of the car (if it's a new car, the price must also include any fees and dealers' charges)
  • The registration number, if the car is registered
  • The engine number, vehicle identification number or chassis number of the vehicle or any other number that can identify the vehicle if the car is unregistered

In Victoria, there are restrictions on P-plate drivers driving high-powered vehicles. Find out about the restrictions at the VicRoads website (new window). Download Consumer Affairs Victoria (CAV)'s Better Car Deals Guide (PDF, new window). It's a useful check-list that can help you find the best deal.

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Get the best deal

Once you've found the car you want:

  • Set a maximum price you'll pay and don't go above it
  • Make your first offer low enough to give you room to bargain
  • Offer cash if you can
  • Check when the registration runs out - if the car's registration is due shortly, add the cost of renewing it to the overall cost of the car
  • Be wary of high trade-in offers - the price of the car you're buying may be inflated to cover the high trade-in price

Important things to check include the 'Notice of Particulars', which lists:

  • The year of manufacture
  • First registration
  • Engine number
  • Cash price
  • Name of previous owner
  • Odometer reading

You must sign the Notice of Particulars when buying the car. The 'Defect Notice' lists the items the trader doesn't intend to repair, and an estimate of their costs. These notices should be very specific. Signing the Defect Notice is essential, and you must keep copies of all notices for yourself. If the car has registration plates, the trader must give you a copy of the valid Road Worthy Certificate (RWC).

Before signing the Purchase Agreement and paying a deposit, you should arrange a mechanical inspection with an RACV or VACC member.

If it's not possible to do this, you should write 'this sale is conditional on the purchaser's satisfaction with an independent mechanical inspection report' into the agreement. This agreement should be in writing with a receipt.

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Who to buy from

You have three options. You can buy from a licensed trader, a private seller, or at auction.

Licensed Traders

Buying from a licensed trader gives you more protection. You'll receive:

  • A Notice of Particulars
  • A three month/5000km Statutory Warranty if the car is less than 10 years old and has travelled less than 160,000km
  • A Certificate of Registered Interest (that tells you it's not stolen and no money is owing)
  • A three-day cooling-off period to cancel the contract, unless you take possession of the car and sign a waiver form

You have to sign the Agreement for Sale, which is a legally binding contract, so understand what it says before you sign. If you change your mind during the cooling-off period you can get your deposit back minus $100 or 1% of the car's price (whichever is more). As with any contract, never sign an Agreement for Sale you don't agree with or understand.

Private Sellers

Buying from a private seller is a bit riskier. You still get a Roadworthy Certificate, but you don't get a cooling-off period or a Statutory Warranty and it's your responsibility to check that it's not stolen and there's no money owing on it. Contact the Vehicles Securities Register (VSR) on 131171. They'll be able to advise you over the phone for free, or issue a Certificate of Registered Interest (for a small cost). You should also check its written-off status by phoning VicRoads on 131171 with the registration number and vehicle identification number. This way you'll know if the car has suffered any major damage that might affect its future performance.

Given the extra risks and hassles involved when you buy privately, you should expect a much lower price. If the seller is charging the same as a licensed motor car trader, buy from the trader instead.

Auction

Buying a used car at auction may be cheaper but it's also very risky. If you buy a used car at auction:

  • The car will not be covered by a Statutory Warranty
  • There is no cooling-off period
  • The car does not require an RWC
  • You may not be allowed to test drive it before you buy
  • The car will have a Clear Title

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Inspections

Don't buy a car if the seller won't let you check it out thoroughly. To find out what you're really buying, insist on an inspection by the RACV or an accredited Victorian Automobile Chamber of Commerce (VACC) mechanic (new window). The inspection can reveal problems that the car currently has or that might develop in the near future. It's a must, because when you buy privately, you are not protected by a warranty.

All registered cars must be sold with a current RWC (issued within the last 30 days). This applies to licensed dealers and private sales, but not to cars sold at auction. Never hand over any money until you've seen the RWC, and never offer to get the roadworthy done yourself. It could end up costing you more than the car is worth.

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Insurance

Car insurance protects against some of the costs and liabilities if you're in an accident. When you register your car, part of the cost is for Compulsory Transport Injury insurance. This covers you, or anyone else, for death or injury if your car is involved in an accident. However, it doesn't cover you for damage to your car or anyone else's, which can be very expensive. Additional insurance is a good idea, if you can afford it, and may end up saving you a lot of cash if you do have an accident.

Whatever kind of insurance you choose, find out whether your car is still covered when someone else is driving it. You can inform your insurance company of any people you want listed as nominated drivers, to make sure they're covered too.

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Types of car insurance

The three most common types of car insurance are:

  • Comprehensive insurance covers you against damage to your car, other cars and property, as well as fire and theft. This type of insurance is usually necessary if you borrow money to buy the car.
  • Third party property, fire and theft insurance covers you for damage your vehicle causes to other people's cars and property, and if it catches on fire or is stolen.
  • Third party property insurance covers you for damage your vehicle causes to other cars and property - not yours!

Your policy may be cancelled or your claim refused if you're under the influence of drugs or alcohol when you have an accident. You will also run into trouble if you don't tell the insurer about modifications to your car, previous accidents, prior driver convictions or personal disabilities.

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Financing

A car is a big financial commitment. See our page on car loans for further information. You don't have to accept the financing offered by the seller, and you can probably get a better deal elsewhere.

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Links

Consumer Affairs Victoria (CAV)
Comprehensive information for car buyers.

Royal Automobile Club of Victoria (RACV)
The RACV is the peak body for Victorian motorists.

VicRoads
Licensing, registration and insurance, including the Vehicle Securities Register. Telephone 131 171.

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