Things to Know Before Buying a Used Car

Before you buy a used car in New Zealand, there are a few things you should know that will make the experience easier and probably save you money.

The first thing to know is that you can buy a used car privately from an individual owner, or you can buy it from a car dealership. There are pros and cons to both, which we will discuss below.

The other thing to know about buying a used car in NZ is that there are legal requirements for both the buyer and seller.

Lastly, it’s important to know that buying a used car will almost always get you a lower price than buying a new one. With those cost savings, however, come a few risks.

Pros and Cons of Buying a Used Car

Pros of Buying a Used Car:

Pro #1: Buying a used car will save you money. You’ll have heard it before … as soon as a car is driven off the lot, it starts to depreciate. So a used vehicle will always be cheaper than the new version of the exact same year, make and model.

Pro #2: Buying a car second-hand enables you to buy a make or model that is no longer being made by the manufacturer.

Pro #3: It is often easier to negotiate on price when buying a used car. If you’re buying it from an individual, chances are they will want to offload it as quickly as possible. A car dealer usually has more wiggle room on price with a used car than with a new one.

Cons of Buying a Used Car:

Con #1: Aside from missing out on that new car smell, buying a used car means you’re buying a vehicle that will have some element of wear and tear. It’s important to find out as much as you can about the history of the car and the driver habits of the previous owners. There will always be some chance that a used car has underlying problems.

Con #2: You may be buying old technology if you’re buying a used car. Manufacturers are continuously updating vehicle technology, so there may be a feature or benefit you’re missing out on. If you’re buying a used electric vehicle, you may be buying a car with an older model battery that doesn’t last as long as newer ones.

Con #3: If you’re buying a used car, it may no longer have a valid or in-date manufacturer’s warranty. It’s helpful to know that when you buy a brand new car, most major components are covered by a warranty for three to five years. The used car you’re buying may be out of warranty.

Advantages of Buying a Used Car from a Dealer

While negotiating with a private seller may seem easier, and you may be able to whittle the sale price down more than you would be able to with a dealer, there are some clear benefits to buying a used car from a dealer:

  • Additional peace of mind – we tend to trust dealerships more than private sellers, particularly if they’re random strangers we’ve never met before. There is always that fear that you won’t be able to find them if you need to make contact after the sale. A dealer, on the other hand, is available for after-sales queries, support and servicing.
  • When you buy a used car from a dealer in NZ, you have rights under the Consumer Guarantees Act (CGA) and the Fair Trading Act (FTA). These Acts do not apply to private sales.
  • Depending on the age of the vehicle, a dealer may be able to sell you a dealer warranty for a used car that is different from the manufacturer’s warranty, which may be out-of-date by the time you buy the used car. You’re not able to buy a warranty from a private seller.
  • A dealer will always provide as much historical information about the vehicle’s ownership and servicing as is available. Chances are they have better access to historical records than a private owner would if there have been multiple owners.
  • A dealer will always allow you to test drive it – usually more than once. They may even let you keep the vehicle overnight to show it to your other half. By the way, if a private seller doesn’t let you test drive a car they’re selling, walk away from the sale immediately.
  • A dealer will usually do all the paperwork for you, so you don’t need to worry about any of that.
  • A car dealer will offer financing if you’re unable to pay the full amount upfront.
  • A dealer will sometimes allow you to cancel the sale if you change your mind for any reason. There will most likely be a fee for this, but it may be possible (something that will be hard to negotiate with a private seller).
  • A dealer is able to conduct a thorough pre-purchase car inspection for you, so you know exactly what you’re buying.

What Should I Check Before Buying a Used Car?

We always recommend getting a pre-purchase car inspection if you’re looking at buying a used car. There are a few things you can check yourself before progressing to that stage:

  • Is there existing paperwork you can review? This will include the current ownership papers, information about any outstanding loans or leases over the vehicle, and whether it’s currently insured.
  • Have a look at the servicing records of the vehicle. Has it been regularly serviced? Has it consistently passed its Warrant of Fitness (WOF) check? If no records are available, take this as a red flag and consider looking for a different used car. All vehicles for sale must have a WOF that is less than one month old.
  • Has the used car been in any accidents? Are there any visible signs damage? Have a good look at the bodywork, tyres, rims, mirrors, engine, and internal components. Are there any records from a mechanic or panel beater that you can have access to?
  • Have there been any recalls on that particular make and model or its parts? Do your research and also try to find some reviews revealing whether there is anything problematic that others have complained about.
  • Are you able to test drive it? If not, be wary and look for something else. Does it start smoothly and drive well? Does it make any odd noises? Is it pulling to one side? Do the brakes or steering shudder? Is there smoke coming from the exhaust? Do the dashboard controls, indicators, heating, air conditioning, stereo system and other internal settings work? Do the headlights and brake lights work? Are there stone chips or cracks in the windscreen or windows?
  • Is the used car still under the manufacturer’s warranty? If so, how much time is left on it, and what is covered?
  • If buying privately, check with the police to make sure the car isn’t registered as stolen.
  • If buying privately, check the Personal Properties Securities Register (PPSR) to see if there is any security interest registered against the vehicle – whether there is any money owing on the vehicle.
  • What is the mileage of the vehicle? This might be a good indicator of how much wear and tear the car has had. If you suspect the odometer has been tampered with, ask to see previous WOF reports.
  • If you’re talking to a dealership, find out what other used cars are available in your price range. This will give you a good idea of what options there are and how hard you may need to negotiate.
  • What would your insurance premiums be with this particular used car? It’s best to find this out first before you get too attached to the idea of buying the vehicle.

Laws on Buying a Used Car

If you’re buying a used car from a dealer, it must have a “consumer information notice” (CIN) displayed. This notice outlines a long list of details about the vehicle and the dealer, providing you with extra security about the vehicle itself and the transaction.

Whenever you buy a car, you are legally required to notify Waka Kotahi/NZ Transport Agency of the sale, and they will then register you as the new owner. You can do this online on their website.

Your Rights When Buying a Used Car

When you buy a used car from a dealer in NZ, you have rights under the Consumer Guarantees Act (CGA) and the Fair Trading Act (FTA).

The CGA requires goods to be of acceptable quality, to be fit for purpose and to match their description. This applies to new and second-hand cars.

Dealers must also comply with the FTA, which means they can’t make false or misleading claims about a vehicle.

If for any reason you are not satisfied with the sale of your used car, you can take your case to the Motor Vehicle Disputes Tribunal (MVDT) to have your complaints resolved.

It’s very important to understand that the CGA and the FTA do not apply if you buy a used car privately.

Taxes on Buying a Used Car

If you buy a used car in New Zealand, there will be GST on it. Talk to your accountant or financial advisor to see if this is something you can claim at tax time.

Is Buying a Used Car Worth It?

Whether or not buying a used car is worth it or not depends on your personal preference. There are many reasons why it makes sense to buy a used car. It does offer the opportunity to save money on the purchase price.

It’s important to assess, however, why you’re buying a car. If you’re not too bothered about having that new car experience and all the latest gadgets or technology, and you fully understand the pros and cons of buying used, then buying a second-hand car may be the best option for you.

If you have a car in mind that you’re considering purchasing, please get in touch with us at Mt Roskill Collision Centre and we can help provide advice and guidance to help make an informed decision.