Buying a used car – what you need to know
- Define your used car needs
- How should I proceed when buying a used car?
- Should I negotiate the price?
- Should I pay cash?
- Do I need to have a current inspection report when buying a car?
Since the Covid crisis, owning your own car has become more important, according to the market research institute Kantar. Young used cars in particular are currently in high demand. If you decide to buy a car, there are a number of things to consider. Here are the answers to the most important questions.
Everything you need to know about buying a used car
Before you can enjoy the freedom of owning your own automobile, there is an investment that has to be made. This is why you have to decide in advance which car you want: should it be a compact car, an SUV or a sedan? Once you complete the obligatory test drive and know that ‘this is the one,’ the sales talk follows. But before that, a technically experienced friend or an independent workshop should check out the vehicle. He or she can check the desired car impartially for maintenance, dents or wear. As is well known, two eyes are better than one. In addition, the CARFAX Vehicle History Report can tell you if the car has a history in up to 20 EU countries and North America. For example, how many hands the car has passed through and in what time frame, and what the mileage should be. If the car passes these checks, you are on to the home stretch.
Define your used car needs
The first thing to do is to define your economic capacity and "the limits you can reach". Consider the maximum amount you have available. That amount will determine the limit you should not exceed.
You should also decide on the category of vehicle that best suits your needs (e.g. small cars, mid-range cars or vans). You will find information about the different models on different portals on the Internet or in used car magazines. When choosing a car, don't forget to take into account all the expected maintenance costs.
After you have made your choice, check the weak points of the model through internet forums so that you know what you should pay attention to later on. Other important criteria for a first search are:
Age of the car
Mileage
Type of use
CO2 emissions
Current location
How should I proceed when buying a used car?
There are a lot of things to consider before driving your new car home. Therefore, here again the most important criteria summarized by professionals in a car buying checklist:
Cross-check vehicle details
The details of the vehicle should be cross-checked. This can be done by going to a technical inspection organization and by checking the CARFAX Vehicle History Report. CARFAX receives data on the history of a vehicle from 20 EU countries and North America. This makes it possible to check whether the vehicle has ever been registered in one of these countries. If the information is conclusive, however, this does not replace a test drive. Test drives are still important because you can get an idea of the technical condition (for example, is the clutch grinding or are the brakes late in responding?) and a detailed external check of the car (for example, does rust show, are there dents or scratches).
Already know which car you want? Reveal its past with CARFAX before you buy.
Choose a seller you can trust
In principle, you should go to the dealer you trust. When buying on the Internet, it is advisable to take a closer look at the dealer (e.g., by searching online and visiting rating sites). This way, you can see whether the address listed is actually the dealership‘s location and what experiences other customers have had there. If the dealership is solid, there will be an imprint with the tax number. Make sure that the purchase contract from the dealer does not exclude the warranty.
Make sure the documentation is in order
When handing over the car, check that the vehicle documents are complete, otherwise there may be trouble with the registration. The service history (if it is not kept digitally at the workshop) should also be available. You can use this to check which inspections have been carried out.
Should I negotiate the price?
Bargaining expected when the selling price is displayed. Especially if the sale tag says, ‘price negotiable.’ If a dealer refuses to budge on the price, the buyer may ask for something extra, such as a gas voucher, winter tires or special rims, on top of the contract.
You can find out how much leeway you have in negotiating prices by looking at online car markets, since they reflect current market prices. Age and condition will also impact the purchase price. With any car that shows a speedometer of 100,000 kilometers and on, one must be aware that the car needs more and more service. Wear parts such as brakes, lights or shock absorbers can wear with use and may need to be replaced. That‘s where an inexpensive car can turn out to be a money-losing machine in the long run.
However, no matter what condition a car is in, the salesperson wants to sell. This means highlighting the best and downplaying the worst. Sometimes dealers will try to put the buyer under time pressure by saying something like: "We already have some interested parties for this car." The key here is to stay "cool." Ultimately, other sellers also have beautiful models if this one doesn’t work out. Once you have agreed on the basic price, the contract phase begins.
A contract with a dealer has the advantage that a warranty period of two years is regulated by law. A private individual can exclude this, though. The common phrase used in contracts is: “As seen on site”. In return, the car is usually cheaper with this form of trade than at the dealership. In these cases, you have to weigh whether the possible risk is worth it to you.
💡 What exactly is covered by warranty rights? Commercial sellers are liable for material defects, private individuals are not, except for warranty promises or deliberately concealed defects. The latter case refers to fraudulent misrepresentation, and this includes all defects that were present at the time of purchase and were not communicated to the buyer. The liability does not apply to the wear and tear of parts. If the buyer notices a possible material defect only six months after the date of purchase, the burden of proof lies with him/her. The warranty applies to all EU countries, which is defined in the directive 99/44/EU. Basically, when buying a car in another EU country, it can be assumed that the warranty period for new vehicles is at least two years. This period can be contractually reduced to one year for used car, except in Sweden. There, in contrast to other European countries, a limitation period of 3 years applies.
Should I pay cash?
In principle, there is nothing wrong with cash when buying or selling. Car dealers often want a bank transfer before handing over keys, papers and car. If you are selling a car, it’s important to protect yourself against counterfeit money. If you go with the buyer to a bank and deposit the amount into your own account via the ATM, you are safe in this respect.
The payment process may fall under the Money Laundering Act, which has been modified since February 2021. This applies to the entire European Union: "For cash transactions carried out by obligated parties within a business relationship (e.g., cash deposit to a customer account) and exceeding an amount of 10,000 euros, the origin of the assets must generally be proven by appropriate documents." This applies to the entire European Union.
If a German citizen buys a car in another EU country and carries a sum of more than 10,000 euros with him or her for the transaction, he or she must declare the amount to German customs. If the seller in the neighboring EU country insists on cash, it must be specified how the VAT will be settled. In this case, a distinction is made in Europe between new and used cars. New vehicles are sold within the EU without VAT. For second-hand vehicles sold by car dealers, "the VAT is already included in the purchase price," explains the European Consumer Center.
When is a car considered new versus used? A new vehicle is a car that has only been on the road for six months since its initial registration or has a mileage of 6,000 kilometers or fewer. Used automobiles are those that have exceeded the six-month period and have driven more than 6,000 kilometers.
Do I need to have a current inspection report when buying a car?
It is not mandatory, but highly recommended. Most dealers present the car to an inspection organization/garage before selling it anyway. This is not out of good will, but a good sales argument. If the main inspection is not up to date, you should know the next date it’s due for one. The new owner will have to take care of it. Therefore, it is useful if the car has a "fresh seal". A valid inspection is also necessary for registration.
If the inspection report for the vehicle is not up to date, the buyer is free to commission an expert at their own expense. If you don’t want to do this, you can use the CARFAX Vehicle History Report to see if the information given during the sales conversation matches the vehicle’s history. This is a strong indicator that you can rely on a trustworthy contract agreement.