1. Vehicle Financing

Vehicle financing is when an owner still has money owing on their car. If the car you buy has financing, then you’ll also be responsible for the debt [1]. Financing companies can repossess the car when the owner does not make payments [2]. Sellers are not even legally obligated to disclose when the car they sell has financing [3]. 

Prevention

The PPSR register will show whether there is financing on a car. You can pay $2 and search the PPSR register using the car’s VIN or chassis number. It will also show the history of ownership, odometer readings, and outstanding fines [4].

2. Salvaged Title

An insurance company gives a car a salvage title when it has been damaged beyond repair (major crash, flood, fire, stolen and vandalised)[5,6]. Even if it’s repaired and drivable later, it still retains its salvaged title.

A car with a salvage title may be:

• Difficult to sell or trade as buyers and dealers don’t want to buy salvaged title cars.

• Difficult to finance. Banks may not want to provide a loan for a car that may not be reliable.

• Difficult to insure. Insurance companies consider a salvaged title car to not be worth much and may not insure the care for much.

Prevention

You can check the written-off vehicles register from Transport for NSW for free[7]. Alternatively this information is included in Service NSW’s Vehicle History Report for $25 [8].

3. Odometer Fraud

A car’s odometer records the number of KMs the car has travelled. Along with the production year, the odometer reading gives a good indication of a car’s wear and tear [9]. Cars with lower mileage are generally more expensive than cars with higher mileage. Odometer fraud happens when sellers rewind the odometer to read less mileage.

In cars with high mileage, components of the car may begin to fail, not work as intended, or are less effective as when they were new [10]. Some problems than can occur in these cars are:

• Stiff or cracked rubber seals that leaks during rain

• Weak or broken air-conditioning

• General wiring issues (warning lamps, power windows)

• Higher chance of mechanical faults

Prevention

The last three odometer readings are available in Service NSW’s Vehicle History Report [8,11].

4. Poor Service Record

All cars require regular servicing (changing oil, oil filter, air filter and so on) so that the car runs smoothly. Due to cost or effort, some owners do not service their cars when required. If the car is not serviced as regularly as it should:

• There may be bits of metal in the engine oil. The dirty oil will chafe between the engine parts which may cause serious damage to the engine over the long run [12].

• Worn break pads lead to long breaking distances and bald tires may lose traction in the rain.

• Leaking suspension systems can have a hard time keeping the tires contacting the road.

If you buy a car with a poor service record, you’ll need to pay for the backlog of servicing to stop these issues from getting worse. These comprehensive services can cost $1k - $3k+ if tires and suspension components also need to be replaced. Buying a car with a clear service history is always the best way to avoid these problems [13].

Prevention

Ask the seller to provide evidence that the car has been regularly serviced. Don’t just trust their word, check the logbook or receipts for yourself.

5. Mechanical faults

Not all sellers are honest and some sellers will try hide and pass off mechanical faults in their car. Major mechanical faults may be dangerous, expensive, and cause a total breakdown of your car. Mechanical fixes range from the routine and easy such as a wheel alignment costing $100 to the difficult and expensive such as a transmission rebuild costing $7,000. The law says that private sellers can sell their vehicle in any condition and do not need to tell buyers about the car’s faults. It is up to you, the buyer, to discover the potential problems with the car [14].

If a car is not properly inspected you may:

• Find your car breaking down in a hazardous location such as a busy highway 

• Need to pay approximately $5 - $10k for an engine or transmission repair

• Be without a car for days or weeks while it is repaired

• Have additional minor problems costing thousands of dollars (cracked cv joints, leaking shocks, oil leaks).

Prevention

A mechanic can inspect the car before you buy (pre-purchase inspection) to minimise the risk of mechanical faults. A mobile mechanic can perform a pre-purchase inspection anywhere or the seller may need to drive it to a mechanic’s shop. The mechanic will provide a report and offer their opinion on the car when they finish.

A common misconception is that a pre-purchase inspection will discover every issue with the car. This is not true as some faults can hide deep inside the transmission or engine. It would take hours and thousands of dollars to physically inspect each component so it is simply not feasible. You can however lower this risk by confirming all the current faults of the car with the seller.

In general, private sale cars are sold in “as is” condition. However if the seller guarantees the condition of the car then they are responsible for any undisclosed issues of the car at the time of sale. This can be done with a contract formalising the terms of sale.

Wrapping it up

Buying a car without the proper checks can be very expensive but I spent 6 months interviewing mechanics, researching used cars, and reading legal encyclopaedias to make buying a private sale car as bullet proof as possible.

From my research, here is a list of checks to make sure you’re buying a good car:

1. Check the car’s VIN number or chassis number in the PPSR report to see if it has any financing.

2. Purchase a Service NSW’s Vehicle History Report to check if the car has a clean title and the mileage is accurate.

3. Ask the seller if the car has been regularly serviced. Confirm with the car’s regular mechanic, verifying the logbook, or the receipts.

4. Hire a mechanic to conduct a pre-purchase inspection. Ask them to outline all the problems that the car currently has or could occur.

5. Have the seller agree and guarantee the condition of the car in writing.

If you don’t have mechanical knowledge, buying a car from a private seller can seem like roulette. I hope this guide helped you understand the most common things that may go wrong when buying a second hand car. It is a lot to check, but if you follow each step, you’ll be driving the car that you want without the fear of a breakdown.

Article by

Roger Jiang

Buyer’s Agent, Secondhand Hero.