How to drive a bargain
BUYING A USED CAR IS A COSTLY EXERCISE BUT THERE ARE WAYS TO FIND YOUR NEXT WHEELS AT THE RIGHT PRICE
Used car prices are sky high at the moment as Australians steer clear of public transport and newcar stock shortages drive demand for second-hand vehicles.
Ross Booth, general manager of car valuation company redbook.com, says it’s a sellers market at the moment with the forces of supply and demand “kicking in”.
“It’s very unusual to see demand increase and supply decrease at the same time. I’ve been in the car industry for 30 years and have never seen these two shifts happen at once,” says Booth.
Analysis of Carsales data by comparison site Finder revealed just how much used car prices have increased in the past 18 months.
A 2019 Kia Picanto Auto S purchased for $16,000 is currently advertised for $18,000 second-hand.
Larger SUVs and 4WDs are witnessing an even bigger upswing, as we spend overseas holiday money on exploring Australia.
In-demand used off-roaders such as the Suzuki Jimny and Toyota LandCruiser are being advertised for thousands of dollars more than they cost new.
A 2010 Toyota Kluger Grande with 150,000km on the clock was selling second-hand in 2020 for about $10,000. Similar cars today are asking upwards of $16,000.
But there are ways to find a used car for the right price.
LOOK FOR LESS POPULAR MODELS
SUVs are all the rage for families, couples, retirees and even singles, but wagons are often just as practical with similar boot space and roomy interiors. So if you can do without the increased ride height you could save big bucks.
Hatchbacks are also in high demand, as they are the perfect first car for a P-plater. Many popular models have sedan versions that are less sought after and therefore cheaper.
If you can drive a manual, you’ll also save money, because the pool of potential buyers is smaller.
Booth suggests looking at smaller niche brands and off-trend vehicles such as sedans and wagons compared to SUVs.
BUY PRIVATELY
It’s more convenient to buy a car through a dealer, as you can look at a wide range of vehicles and brands in the one spot. Dealers also offer short warranties for added peace of mind. But they have to make a living and often they make better profit margins from used cars than new ones. Dealer margins have fattened considerably in the past year.
Browsing online classifieds and contacting owners can be fiddly and
tiresome work, but it can save you thousands in the long run.
DO YOU NEED TO BUY?
Upgrading your ride is always an exciting proposition, but you might need to ask yourself if it is really necessary right this minute.
The shortage of new-car stocks won’t last forever and Booth warns that when the waves of new cars arrive the price gap between new and used will widen again.
When prices reset, you could be left with a car that cost more than it was worth and depreciates quickly, making it harder and more expensive to turn over when you’re ready to upgrade again.
STRETCH YOUR BUDGET
Booth says the strength of used car prices means there is better value in buying a new car. If you can, stretch the budget to a new car. With the generous warranties offered – some up to seven years – you’ll also enjoy more peace of mind.
“New car prices haven’t gone up as much. The only issue is finding one in stock,” he says.
SELL PRIVATELY
Trading in or selling directly to used car buying services is by far the easiest way to get rid of your current set of wheels, but if you can put up with inconvenient visits and lowballers calling you with insulting offers, selling privately could save you thousands.
Booth says it is worthwhile asking for a dealer trade-in price as it gives you a guide. The quoted price can also last for several months, so you have back-up if your car doesn’t sell online.
Taylor Blackburn, personal finance specialist at Finder, says used car prices are defying historic trends.
“Passenger cars are becoming an appreciating asset, it’s mind boggling,” he says.