5 steps to buying a car

There are five things you need to do when you buy a car:

1. General inspection

Use our car inspection checklist on the car in a well-lit area. The car should be clean and dry, or you may miss defects in the panel work.

2. Test drive

The drive should take up to half an hour, again, with our checklist. It helps to have someone with you to assess some of the items on the list.

Make sure you include some speed driving on the motorway or open road, and some hill work for checking the gears and handbrake.

Although fine weather is good for the inspection, rain can be helpful for the drive. You'll give the wipers a better workout, and you might even discover a leak or two.

3. Mechanical inspection

Most of the time, it's not a good idea to use a mate. If they miss something, it's bad luck.

But if you pay a specialist inspection service or your own garage or mechanic, they are required under the Consumer Guarantees Act to do the job to a reasonable standard according to your instructions. If they get it wrong, you can hold them liable for any losses you incur.

A full pre-purchase inspection will cost up to $120: not much in the total cost of the car.

4. Paperwork

The car itself is only half the story. There's also a lot of documentation to check, especially if you're buying from a dealer.

Warrant of fitness

Every vehicle sold by a dealer must have a warrant of fitness issued no more than one month before the date the vehicle is delivered to the buyer. Private sellers have the option of selling without a warrant, provided the car is clearly identified for sale "as is where is".

Supplier Information Notice

A dealer is required to attach to every motor vehicle displayed for sale a "supplier information notice" (SIN).

The information that must be disclosed in the SIN includes:

• The name and business address of the dealer.
• Whether the dealer is a registered motor vehicle trader.
• The cash price of the vehicle.
• Whether the vehicle is subject to road user charges.
• Whether any security interest is registered over the vehicle.
• The year in which the vehicle was manufactured (or the manufacturer's designated "model year").
• The make, model, engine capacity and fuel type of the vehicle.
• The year in which the vehicle was first registered in New Zealand, or, if the vehicle was first registered overseas, the year of that first registration.
• The odometer (distance travelled) reading, or a statement that the the odometer reading is or may be inaccurate.
• Whether the vehicle has been re-registered.
• Whether the vehicle is recorded on the motor vehicle register as having been damaged when it was imported.

If you buy the car, you must be given a copy of the SIN.

Debts

If you buy privately, your car could be repossessed if there are any outstanding debts on it. Use a car history checking service to find out if the car is clear of debt.

If you buy from a registered motor vehicle dealer, you won't be liable for any such debts, unless you were told about them.

Ownership

The certificate of registration, which you should be shown, lists the current registered owner of a car. This should be the company or person - whether dealer or private - you are buying the car from.

If you're in any doubt about the ownership of a vehicle, call the police. They'll tell you if it's been reported stolen.

Sale agreement

If you're buying from a dealer, they must provide you with a written sale agreement and the Supplier Information Notice which you have signed. Don't sign an agreement until you have read and understood all the clauses, particularly those regarding interest rates and warranty costs. Beware of documentation fees charged by the dealer.

Change of ownership

Both the buyer and the seller have to fill out forms available from an LTSA agent (such as New Zealand Post). The buyer pays the fee and is ultimately responsible for the changeover.

If you're selling privately, make sure the changeover really has happened before you release the car. You don't want speeding or parking tickets turning up addressed to you.

5. Finance

Dealer finance is often expensive. You'll probably get a better deal from a bank. If you are a home owner, the cheapest finance you will get is by extending your house mortgage.

With any loan offer, check the time to repay, the monthly payments and the total cost of credit over the term of the loan. All lending organisations must provide this information, to allow you to compare the deals they offer.

If the dealer offers an interest-free loan, check there are no extra hidden fees and that the asking price hasn't been inflated.