Finance Your Budget Used car nightmares: The red flags that could save you thousands
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Used car nightmares: The red flags that could save you thousands

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It’s the nightmare every used car buyer dreads – purchasing a lemon.

Georgie, 23, paid $11,000 for a second-hand Volkswagen Golf in 2020, but within a few months realised she had a very expensive problem.

After taking the car for a routine service, Georgie was facing a $2000 bill to fix a series of problems with the car, which smashed her budget.

“The rear brakes were worn, the callipers and the discs,” Georgie said.

And it turns out the aircon system was broken, as well.

“I was furious,” Georgie said.

The twenty-three-year-old is one of a growing number of buyers left with lemons after diving into the post-COVID used car boom.

Datium Insights data shows prices have risen a massive 40 per cent since January 2020, and all the extra activity has heightened the risks for budget-conscious buyers who can’t afford to buy new cars amid global supply bottlenecks.

But the problem is working out whether a used car is worth buying or more trouble than its worth, and that isn’t easy.

More than 80 per cent of used car buyers worry about buying a lemon, according to a recent survey of Australians by Mycar Tyre & Auto.

“I thought I’d done everything right, I tried to, but still ended up having to pay all this money,” Georgie said.

Used car red flags

So, how can you avoid buying an expensive problem car?

Luckily, there are a few warning signs you can watch out for.

Jim, a mechanic at Precision Motors in Melbourne, said buyers should be sceptical about the reason the seller is offloading it in the first place.

The first step is to ask how recently the seller bought the car, he said. If it was in the last two or three years, it might be riddled with problems.

The second red flag is how many miles the vehicle has covered and where it has been driven, so make sure to ask about the car’s history.

“If the car is 10 years old and it’s done anything above 150,000 [kilometres] then you’re looking for trouble,” Jim told TND.

That’s just a rule of thumb, though. Georgie’s car had only been driven 10,000 kilometres around Sydney, yet it was still in poor shape when she bought it.

Beware bargains

Carsales.com.au technical editor Ken Grattan said buyers should also be on the lookout for cars with warranties that are about to expire.

“If the owner anticipates that the car will be expensive to maintain and may require more than normal servicing and repair, they will no doubt want to step away from the vehicle,” he told The New Daily.

Mr Grattan said low prices are also a red flag, as you typically get what you pay for.

“[Bargain prices are] also a possible sign the car is not a ‘good solider’,” he said.

The best way to work out whether the car in question is too cheap is to look at what others of the same model are selling for elsewhere.

If the car you’re being offered is 20 per cent less than the average market price that’s a big red flag.

A small price to pay

Jim said it’s hard to tell whether a car is a lemon just by looking under the bonnet, and so he advises buyers to get a detailed service history before handing over any money.

That means you’ll need a pre-purchase inspection by a mechanic, he said.

An inspection will set you back about $200, but that’s a lot less than the cost of fixing a poorly maintained vehicle after buying it.

“It will give you piece of mind,” Jim said.

“We can’t predict what might go wrong but we can catch anything that is wrong [with the car].”

To organise a pre-purchase inspection you’ll need to organise taking the car to a workshop before signing any purchase agreements, or arrange for a mechanic to drive out to inspect the vehicle.
You’ll want to make sure the mechanic provides a written evaluation of the vehicle after they inspect it.

But buyer beware: Georgie got the all clear from a mechanic before purchasing her Golf and still landed in trouble.

Her advice is to supplement the expert advice with your own independent research. That way you’re in a better position to test your mechanic’s advice.

“There are loopholes everywhere,” Georgie said. “Make sure your mechanic does a thorough job.”