Everyone loves saving money, but when it comes to cars it pays to be especially wary of what you are actually buying. Be careful not to buy into someone else’s problems.  

Apart from potentially costing you a lot of money, there are many issues that may not be obvious to the untrained eye. Here are five key tips to help you make the right choice.

1. Check vin/engine numbers
Do you want to avoid buying a car that has had its engine replaced? Or worse still, one that’s been stolen? Then check the compliance plate for the car before you look at anything else.

It’s usually located behind the engine on the firewall. The small metal plate contains the VIN number, chassis and engine number and you should make sure these numbers (along with the number plates), match the number on the registration papers.

2. Are you buying a car or someone else’s loan security?
It may sound bizarre to the uninitiated, but if there is outstanding debt on the car then the vehicle may actually be the collateral on that loan. That means if the loan is not repaid then the bank or finance company still have legal right to repossess the car, regardless of the fact that you have paid good money for it.

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Buying a used car can save you a lot of money. Just be careful that you really are getting a bargain

A car dealer is required to ensure this is not the case, but if you are buying privately then it is up to you to check for this. Fortunately there is a national register of vehicles that are currently nominated as being security on finance, so you can quite easily look this up. It’s known as the Personal Property Securities Register and you can perform a search online here. It only costs a couple of dollars, but could end up saving you thousands!

3. Make sure it isn’t a ‘car crash’ survivor
A Roy Morgan survey in 2013 indicates that 3 million motorists in Australia say they have been involved in at least one motor vehicle accident over the last five years. That’s a lot of repaired cars running around and many may have had quite serious repairs made, which will affect the performance or longevity of the vehicle.

To avoid buying a lemon, there are some simple checks you can make to determine if the car has been in an accident. One of the most obvious is to look around the door wells or any joins on the car to see if any overspray has occurred onto trim or wiring. A car in factory condition will not have such marks, so overspray is a sure sign that some panel beating or repainting has taken place.

Other tell-tale signs of body work are panels that are misaligned or not matching, different feel on paint finish on different panels (e.g. an orange peel effect, rather than a smooth finish) and problems with doors and windows opening.

A look under the hood is also recommended to check if engine mount or hood hinge bolts have been stripped of paint, which would indicate that they have been removed at some stage in order to make smash repairs.

You can arrange an inspection through your state's motoring organisation if you are not comfortable doing these checks yourself.

4. Shop around for finance
It’s not unusual for the excitement of getting a new car to cloud your judgement on the finance you arrange to pay for it. This can end up costing you dearly. Rather than just opting to take the car dealership’s finance offer or just going to your usual bank, take a step back and do some homework.

There are comparison sites available that will let you assess loans against each other. These sites will take into consideration fees and charges as well as interest rates, so that you get an idea of the total cost over the life of the loan. It’s also vital to check things like whether extra payments can be made, so that you can repay early and save on overall interest.

5. Beware buying from a private seller
Buying from a dealership gives you certain basic protections, such as an assurance that the car is not encumbered with someone else’s debt, a cooling off period, a warranty against major problems and confirmation that it is not on the written-off vehicles register.

Of course you pay for such purchasing security, so many people opt to buy privately to get a better price. You can certainly pick up a bargain this way, but you must be doubly vigilant so that you are not buying into trouble.

The first step is to insist that you meet the seller at their own address, so that you can check that it matches the address on the rego papers. This will ensure that you are not buying a stolen car.

Make sure to check the car's history when purchasing a vehicle from an unlicensed dealer

An all too common practice by scammers is to wind back odometer readings to make a car appear less travelled than it actually is. To verify this you can ask the seller to provide service log books or service invoices, which will show the odometer readings.

It is also essential to ask for a written receipt, which gives a detailed description of what you are actually buying. This should include the seller’s full contact and address details, the agreed condition of the vehicle, (i.e. list of any defects), licence and registration/VIN/chassis and engine number and the cost of the vehicle.

Of course, with no warranty a test drive and a good inspection of the mechanical condition are essential too. If you are not confident about assessing this yourself then contact your state motoring association to arrange an inspection or have your own mechanic take a look at it. A little extra expense could avoid you wasting hundreds of dollars.

Have you had a bad or good experience buying a used car? Share your comments below.