Buying a nearly new vehicle can save you a tonne of depreciation, but still get you many of the new-car benefits.
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For example, we found an ex-demonstrator Holden Spark LS with 1500km on the odometer for sale at a Holden dealer in Hamilton. It was advertised for $15,888 including on-road costs. That’s an instant saving over new of about $3000. It also has a “driver assistance pack” (parking sensors and rear-view camera) that’s usually an extra-cost option on a new Spark. The buyer gets the new-car warranty and service package, and the satisfaction that someone else has absorbed the new-car depreciation.
Cars typically have a three-year model cycle, with a mid-cycle freshening (or “facelift”) halfway through. If you time it right, towards the end of the model cycle, you can pick up a one- or two-year-old used auto that’s near-identical to a brand new one, at a significant discount. Buying a previous model (or pre-facelifted model) will save you even more, though that may be offset by a lower future resale value.
Some brands offer “approved” or “certified” used cars, such as Toyota’s Signature Class vehicles. These are cars the manufacturer has vetted and, in some cases, restored to near-new condition. You’ll pay a premium over a regular used car, but you’ll receive a vehicle with the equivalent of a new-car warranty and perhaps a service plan. However, you may be better off using the extra cost to inspect and service a non-approved used car and leave a “rainy-day” fund to pay for any maintenance and repair. You’ll still be covered by the Consumer Guarantees Act should anything go wrong.
Most cars sold in New Zealand are pre-owned, and many are freshly imported from overseas (mostly Japan). Any used car should be durable, safe, fit for purpose and free from major defects.
What’s reasonable depends on the vehicle’s age and distance travelled, the price paid, and any representations made.
Used car dealers should thoroughly check and service cars before sale. They should have confidence in them and be prepared to make things right if they go wrong – under the Consumer Guarantees Act (CGA) it’s their responsibility to fix problems. However, the hundreds of calls we receive to our advice line show many sellers aren’t so thorough.
Every year our advice line deals with more than 300 complaints from members who’ve bought cars that have gone wrong. We see a few common themes: cars freshly imported from Japan, at least eight years old, at least 70,000km, with no repair or maintenance history. Many are premium European makes – cars that aren’t as reliable as you might expect and cost a premium to fix.
So what can you do to protect yourself? First, understand the paperwork and responsibility of the dealer selling the car.
A dealer must provide an accurate Consumer Information Notice (CIN). This single page confirms:
Pay particular attention to whether the car has been re-registered (usually meaning it’s been written off after an accident) or imported as a damaged vehicle.
A used car sold by a dealer must have a warrant of fitness less than a month old. However, a private seller can sell a vehicle without a warrant, provided the car is clearly identified for sale “as is, where is” (this isn’t an option for a dealer).
If you buy from a dealer, they must disclose any security interest on it for outstanding finance payments (you don’t have that protection when buying privately – you should use a vehicle history checking service, such as CarJam, to find out if it’s debt-free).
On sale of a car, a dealer also needs to provide a written sale agreement, plus a copy of the CIN signed by you. Don’t sign an agreement until you’ve understood all the clauses.
There are a few reasons why dodgy dealers masquerade as private sellers: no CIN, no security declaration, no written sale agreement and the ability to sell “as is, where is” without a fresh warrant. Look out for these scoundrels, avoid them and report anything suspicious to the Commerce Commission.
When you are satisfied the seller and car are both above board, use our used car checklist (99.7 KB) to assess any used auto you view. It covers the basics you need to ensure there are no major problems lurking. It isn’t always possible to view and drive the car before purchase – but we advise doing so if you can. If you can’t, it’s more reason to check everything carefully.
Whereas new cars have a list price, used cars have a sticker price. That’s the starting point for your negotiation. You should never pay sticker price.
Research the price of the car you are looking at: look for examples of the model of similar age and with a similar odometer for sale on trademe.co.nz or autotrader.co.nz. If this particular model is listed on one of the sites, check out how long it’s been there unsold – the longer, the better for negotiating discount. It can also pay to get a valuation report from redbook.co.nz ($20).
Your biggest point of negotiation will be wear and tear or problems you find during your pre-purchase inspection and test drive. While the car must legally have a WOF no older than one month, that’s the minimum. Tyres or brake pads worn close to the legal limit, or other signs of neglect give you opportunity to haggle a reduced price, or make repairs or replacements a condition of the sale.
Both buyer and seller must fill out “change of ownership” forms, available from a New Zealand Transport Agency (NZTA) agent (such as New Zealand Post) or use its online transaction centre. 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.
Offered mechanical breakdown insurance with your new car? Our advice: forget about it.
Dealers like the insurance: it’s extra profit on a car sale and an attempt to offload their CGA responsibilities (even though they can’t contract out of the act). But like any extended warranty, you’ll pay to get cover you likely already have.
We think breakdown insurance isn't worth the cost. You're better off spending your money on a pre-purchase inspection and getting the vehicle regularly serviced after you buy. See our full report for more information.
Should you buy new or used? What should you look out for when buying from a dealer, and what are you rights? We’ve tackled the big questions around buying and owning a car, plus looked at which car makes and models are most reliable.