Firstly, if you don’t already know, used cars here in Australia are not cheap. For more details on that, check out my post Buying a Car in Australia. What’ll it Cost? Having said that, somebody made a very interesting comment somewhere on this website saying how great it was used cars here in Australia retain their value so much longer.
See, there’s always two ways of looking at things.
Anyway, a few weeks ago I wrote a post called Driving in Australia: Know the Law; if you read that post you will know that one of those strange laws is to do with selling a car here in Queensland.
Those of you who did read the post will also have known I was selling my Jeep; you’ll be pleased to hear it is now sold. As a result of that I can tell you about another strange law, this time about buying a used car in Australia.
Before I do that though, I do understand that some of you having read the title of this post may have been hoping for some helpful tips when buying a used car in Australia. I was tempted to write such a post, but it’s been done so many times before by people much smarter than me.
If it’s these sorts of car buying tips you need, I suggest going to Google Australia and search for “tips buying used car“.
I did and I got results from two of Australia’s largest online car sales websites, more tips from Choice, Australia’s consumer magazine, tips from the RAA (Royal Automobile Association) and the RAC (Royal Automobile Club) all on the first page of big G, so I don’t think you need any more tips from little old me.
That said, I am going to give you one tip towards the end of this article, but first that strange law.
Goods and Services Tax
Or GST as we call it here. This is Australia’s equivalent of VAT in the UK and Europe and probably sales tax in the USA.
Here’s the rule in a nutshell. When you buy a car from a private seller, there is no GST to pay. When you buy a car from a car dealer who is registered for GST, and he will be if he sells enough cars to actually make a living, then GST has to be added to the price.
- So if a private seller wants to sell a car for $10,000, that’s what he sells it for.
- If a dealer wants to sell a car for $10,000, he sells it for $10,000 plus $1,000 GST equals $11,000.
I’m sure you can see that this makes for a very uneven playing field between car dealers private sellers.
It gets worse for the car dealer.
When a car dealer sells a car he has to provide a warranty, he has to guarantee the car is free from finance, hasn’t been a write off or been stolen. If he is advertising it as “Drive away, no more to pay” then he also has to pay the 3% car tax to the government and make sure it has valid registration (rego).
A private seller doesn’t need to do any of this, so at the VERY minimum you will have to pay that 3% car sales tax to the government. So now you’re $10,000 car purchased privately has already gone up to $10,300.
That narrows the field slightly, but not enough. That leads me to…
Bobinoz’s one and only used car buying tip
In all the time I lived in the UK I never, ever bought a car from a car dealer. When I arrived in Australia in 2007, one of the first things I needed to do was buy a car. I pretty much ignored dealers and bought my Jeep privately, I’m pleased to say that did work out for me.
This time though, when searching for another car to buy online, I decided to look at both dealers and private sellers. Given the advantages private sellers have over dealers you’d think that wouldn’t change for me this time round and I’d still be buying private.
Well, I can tell you that for the first time in my life the car I just bought, a Nissan X Trail for those who would like to know, came from a dealer.
- I got the peace of mind a dealer warranty
- I got 6 months car registration fully paid
- I got the 3% car tax paid, nothing more for me to pay
- I was guaranteed the car was free from finance/not a write off/hadn’t been stolen
And here’s the biggie for me…
- Car dealer prices for the cars I was looking at were, for the most part, the same or cheaper than private sellers.
The car I bought was not available privately from anyone else any cheaper.
I could have given plenty of examples here, but it seems a little pointless as these things change daily. What was for sale when I looked, won’t be for sale when you look.
But I will tell you I looked at Nissan X Trails, Honda CRVs, Hyundai Tucsons, Ford something or others and all sorts of 4×4′s in the price range of $15,000-$20,000 and time and time again, dealers were the same as or cheaper than the equivalent cars being sold privately.
I’m not suggesting this is an unbreakable rule, I’m not saying this is a theory I will stand up and defend until the cows come home, but what I am saying is this…
If you’re looking to buy a used car, don’t discount getting it from a car dealer, even if you’ve never bought one from a car dealer before.
I don’t know why this appears to happen, how it can happen or if it was just a fluke for me. But I did look at lots of different cars over several weeks and it was happening all the time.
Anybody else experienced this? I’d love to hear your views, please feel free to comment below.