Second best: Are used cars still worth your money?
Last updated on February 6th, 2025
If you've been shopping for a secondhand car recently, you've likely noticed they're still not cheap, especially if you want to avoid ending up with a lemon.
The pandemic caused production delays and a shortage of new cars, driving up demand for the next-best option. While prices for used cars have come down somewhat, they are still higher than pre-Covid levels.
According to the Moody’s Analytics' price index, the average used car now costs 20 percent less than its peak in May 2022 but is still 40 percent higher than pre-pandemic levels.
So, are used cars still a good option? Is 'second best' really the second-best choice?
Do your research
Before you start shopping for a car, it's essential to set clear parameters. Think not just about the type of car you’d prefer, but the price you’re prepared to pay. And consider important factors such as the car’s fuel efficiency and safety.
Price
Have a budget in mind and do your research to find the best deal possible. On average, buying a used car can save you 20 to 30 percent compared to purchasing a new one.
Of course, the actual amount you save will depend on a number of factors, such as the car's make and model, age, condition, and popularity.
As an increasing number of Australians are reeling from cost-of-living pressures, secondhand SUVs and utes are becoming more affordable, especially as fuel costs influence buying decisions.
Catarina Noro, from Moody’s Analytics, said light vehicle prices remain nearly 50 percent higher than pre- pandemic levels, while trucks and SUVs are just over 21 percent higher.
Fuel efficiency
Generally speaking, newer cars tend to be more fuel-efficient than older models. However, there are many factors that can affect fuel economy. These include the weight of the car, the size of the engine, and the way you drive.
Compare the fuel economy of different makes and models and factor that into your purchase decision – you may find a model that saves you a few thousand upfront is quickly eaten up with the extra costs at the bowser.
Car safety
Second-hand cars may not come with the same level of safety features as newer models. For example, they may not have electronic stability control systems.
But well-built cars from reputable brands are generally safe, regardless of age. So, it's best to stick to well-known brands that have a good reputation for safety.
Always compare the safety ratings of different makes and models. Once you choose a car, have it thoroughly inspected to ensure it's roadworthy.
Car warranties
New cars these days come with up to 10-year warranties as part of the sales package. Used car buyers don’t have the same benefits.
When you buy a used car, unless otherwise stated in the manufacturer's warranty, the remaining warranty term transfers to the new owner. But while you have certain protection under Australian Consumer Law, if the vehicle is under the extended or statutory warranty, the warranty usually does not transfer when the car is sold.
Even when a used car is still under warranty, buyers can run into issues with the manufacturer, as was the case with some of the owners involved in a class action against Hyundai.
Check the history
Get the car’s history report and check for any major accidents or repairs that may have been done. You should also check for any outstanding loans or ownership disputes.
Use the Personal Property Securities Register, a national register of security interests in personal property, to check this, as well as whether there are any other encumbrances, such as if it has been reported stolen or written off by an insurance company.
When a vehicle has been damaged and it is no longer safe or cost-effective to repair, it is "written off”. Statutory write-off and repairable write-off are the two types of written-off vehicles.
Statutory write-offs are unrepairable and can only be used as spare components. If it is unsafe to fix a vehicle due to structural damage (as an example, a bent chassis), it is usually considered a statutory write-off. This might be because the car has been in a major accident, or it may have been damaged by fire or flood.
You won't be able to get a statutory write-off repaired or registered for the road.
A repairable write-off is a vehicle that has sustained damage but can be repaired and returned to the road. In this instance, you would need to take the car to an authorised repairer to be assessed and repaired. But before buying a repairable write-off, make sure it's legal in your state, as it can vary. Check with your local road transportation authority to see if they treat these vehicles the same way.
And don’t rely solely on the PPSR for important information about a car you’re keen on — things you can’t search for include any loans or debts associated with the vehicle or ownership disputes.
It's important to remember that the PPSR is only a guide, and it's always best to get a second opinion from a car mechanic before making a purchase – you don’t want to buy a lemon.
Check for recalls
It's also important to check if the make and model you're interested in has any recalls on it. You can do this by visiting the government's vehicle recalls website.
It will tell you if there are any safety defects or issues with the car that need to be fixed. It will also tell you how to get the car fixed, if necessary.
Keep in mind that some years experience a surge in recalls. Being aware of these high-recall periods can help you avoid problematic vehicles and save time during your search.
The bottom line
While secondhand car prices remain inflated, they continue to be the go-to option for many Australians who either can’t afford a new car or prefer not to spend that much.
There are still ways to get a good deal if you invest the time and energy into doing due diligence. Never take the seller’s word about the quality of the vehicle - even they may not know of any issues that lie beneath the hood.
If you have had any issues with your secondhand car, lodge your complaint with us and let us help you handle it.
