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Buying a car

Buying a car

Buying a used car – here’s our top tips!

Buying a used car is a major purchase and can be daunting and risky. Make it easier with our 7-point guide.

Above all, it is important to get financial advice for this significant purchasing decision.

1. Work out your budget

Seriously assess what you can afford to spend on a car, or what you can afford in monthly loan repayments, and stick to this budget. Assess loan repayments and running costs, remembering that older cars with higher mileage are likely to need more frequent maintenance.

Assess several options for any loan: you should always talk to your bank, see if the vehicle dealer offers finance, and look at other financing options. Weigh up your choices – if you can secure the loan with another asset, you may be able to get a lower interest rate. One option is adding the loan to your mortgage at the going mortgage interest rate.

No matter what option you choose, go online, obtain quotes, and get your bank’s advice. You need to know you’re getting the best deal, and understand exactly what your repayments will be and the total cost of your purchase.

Car insurance is also a major part of the overall cost of the vehicle. Obtain quotes online and include the cost of your premiums as part of the total cost of your car. Have your insurance option ready to go so you can insure the car straight after the purchase and before you drive away.

2. Know what you’re buying – do your research

Understand your requirements and then research makes and models of cars that suit your needs and budget. Think about size, type of usage, fuel type and economy, safety, and reliability.

Hone in on the make, model, and style of the car you’re looking for by going online to identify cars in your price range and the price for specific car models. Consumer reports, Auto Trader, Trade Me – are all good places to start. See also safety information on www.rightcar.govt.nz, and fuel economy reports on EECA’s website.

Decide if you want to buy from a dealer or through a private sale. Dealers are subject to the Consumer Guarantees Act and Fair Trading Act – this includes sellers on auction sites, like Turners or Trade Me where they say they are registered dealers or “in trade”. However, these auction sites also have listings from private sellers. If you buy privately from an auction site or a vehicle displayed elsewhere, you’re not so well protected.

See the Ministry for Consumer Affairs guidance about purchasing vehicles. If you use a registered dealer you’ll have more options if something goes wrong (search the Motor vehicle traders’ register). Dealers are also required to tell you if there’s money owing on a car. If you don’t know, you could be in for a nasty surprise. If you’re buying privately you need to search the vehicle on the Personal Property Securities Register (www.ppsr.govt.nz).

3. Shop around – use the internet

Once you’re clear about the make and model of vehicle that you’re after, shop around to make sure you get the best deal. Using the internet is a cheap and effortless way to compare potential vehicles.

Avoid buying on a whim – you don’t want to impulse purchase and then find out too late that you can’t afford the car, or the performance of the car doesn’t meet your expectations.

Do your research and stick to it.

4. Test drive the car

Make sure you test drive the car.
You’ll want to make sure the car is comfortable to drive, some cars just aren’t. If you have children, take them along. Their comfort level is important too.
You’ll also want to test the steering, brakes and car handling to your satisfaction. However above all, for confidence in this important purchase, get a pre-purchase inspection.

5. Other things to check

Check the vehicle is currently licenced (the “rego”). If it is not, the seller is liable for any outstanding licence fees up to the date of the sale and acquisition, and you, the buyer, will need to pay for any fees from the date of purchase.

If it is a diesel vehicle, check Road User Charges (RUC) are up to date. If they are not, then take this into account when negotiating the purchase price. The owner of any vehicle that is to be driven on the road is responsible for ensuring the RUC are up to date – and this will be you when you are drive the vehicle for the first time.

Check the vehicle’s service or repair history so you know exactly what you’re purchasing.

Obtain a vehicle history check to find out if the vehicle’s been written off, stolen (check the Police website) or if finance is still owed on it via the Personal Property Securities Register (www.ppsr.govt.nz). You can even do this by text using their TXTB4UBUY service. It is best to do this on the same day you pay for the car in case a security interest has been registered in between you agreeing to buy the car and paying for it.

Make sure you see a Certificate of Registration before you purchase the car to ensure that the current owner of the vehicle is the person/business selling it to you.

If you’re buying from a dealer, take the time to read the Sale Agreement and Consumer Information Notice.

6. Negotiate the price

Next to buying a house, purchasing a new car is one of your most important investments decisions so you want to make sure you’re getting the best deal.

Once you’ve selected a potential vehicle, do everything you can to negotiate the purchase price in your favour, if you don’t ask, you don’t get!

Practice your negotiation strategies and tactics to prepare. Use your research about prices, be confident, stick to your guns, and don’t feel bad about walking away if you don’t think you’re getting the deal you want.

Once you’ve agreed a price, you’ll also need to discuss with the seller how you’ll pay for the vehicle, either in cash or payment directly to their bank account.

A bank transfer is highly recommended as it provides additional records about the amount and date of the sale. For higher priced vehicles, check with your bank about the best way to transfer money – if your bank limits the daily transfer amount talk to them about approval to move the right amount across when you are ready.

(If your seller banks with your same regular trading bank, electronic transactions can be almost instantaneous. If different banks are involved the transaction should occur hourly. Check with your bank, and plan with the seller about how you will each recognise the sale has gone through.)

If buying privately, document the sale in a handwritten note for added assurance. State the date, seller and buyer’s names, addresses, phone numbers, vehicle details, and sale price. Make two copies, one for the buyer and one for the seller, and each sign the document.

Remember – before you drive away, ring your insurance company. Most will complete your insurance on the spot.

7. Complete the paperwork

Once you’ve purchased your new car, you and the seller both need to notify the New Zealand Transport Agency within seven days of the change of ownership, by completing a Change of Ownership form. This can be done online at www.nzta.govt.nz if you are registering your vehicle in your own name. Otherwise, for any ownership changes, including when the vehicle will be owned by a company or trust, call in to your local VINZ branch.

If you don’t notify the NZ Transport Agency you could be fined and you may also be liable for any unpaid license fees or traffic fines that are owing on the vehicle.

If you buy a vehicle from a dealer, they may complete some or all of the notification process on your behalf. However, you should always confirm that the dealer has completed this process – you’ll know because the NZ Transport Agency will mail the vehicle’s Certificate of Registration within 10 days to confirm the sale has been completed.