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Used Car Purchase: Tips & Inspection Checklist (By weebee from MyCarForum)

I see a number of threads with questions and tips on buying a used car. Buying a used car can be a daunting experience, especially for first time buyers who have to confront experienced used car dealers. I hope my small contribution here will be useful in making your used car shopping experience more organised and hassle free.

I have a soft spot for older cars, as well as cars that are close to scrapping, so I thought I would share my experience as someone who goes through a number of used car more often than usual (driving two different vehicles each year on average, for the past few years).

A quick search on the internet will turn up many websites offering very good guides on what to look out for when buying used cars. Some have detailed step by step guides with picture references, some have simple checklists. My contribution here would be to offer a quick reference for drivers who intend to buy a used car in Singapore. In addition to providing a downloadable checklist, I will also share some pre-viewing tips so as to help you (and the seller) save time and to maximise your chances of getting a car that is in a reasonably good condition for the money.

Pre-viewing tips

  1. Have a price in mind

This is the most important thing to settle before you start contacting the sellers. No one can do this for you. You, as the car buyer, are the only person who is in control of this, so please take some time to figure out what price you are willing to pay before you go car viewing. This will save you and the sellers a lot of time because there is no point in trying a car if the seller is not willing to match your price anyway.

There are two ways to go about coming up with the price: (1) Have a fixed budget and see what kinds of cars you can get with that price, or (2) See the kind of cars you want and figure out if you can afford it. I suggest you pick the second option. As much as we want to convince ourselves that we *need* a car, most of the time we are out to buy a car that we want. If we just need a car to get from point A to point B, we would all get the cheapest car available.

Now that you have narrowed down on the models that you are interested in, take a look at the annual depreciation of the vehicles. This is derived from the selling price of the vehicle, minus the PARF rebate at the end of 10 years, divided by the remaining COE lifespan. E.g. A $50000 5 year 6 months old car with a PARF rebate of $5000 has an annual depreciation of ($50000-$5000)/(10yrs – 5yrs 6mths) = $45000 / 4.5yrs = $10000/yr. For the sake of simplicity, we will exclude the export/body value of the vehicle, but you can also factor it into the calculation if you are confident of fetching a certain price for the body of the car.

Once you have an annual depreciation in mind, look at your overall budget. This will give you an indication of the age of the cars which you can afford. For example, if you are comfortable with a depreciation of $10000/year, and your budget is $50000, you can probably look at cars that are 5-6 years old. If your budget is only $20000, that means you should be looking at 8-9 years old cars.

Why is having a price in mind important?

Cars sellers sell cars in different conditions, with different motivations. An urgent private seller might sell a well maintained car at a much lower price than a car dealer who just wants to find a blur sotong to chop carrot. For the same type of car of a similar age, some sellers might ask for a $8000/yr depreciation while another might ask for $12000/yr. That’s 50% more than the cheapest car.

Clearly, if you are only prepared to pay $10000/yr, you should not even bother looking at cars with a higher depreciation than what you are prepared to pay. If you want to try your luck, ask the seller for the last offer and if the price is negotiable. Sound them out for the price you intend to pay and the sellers will usually let you know whether you should go on to view the car.┬áSave yourself and the seller the time and hassle of checking and viewing the car. If you are online shopping, just send the sellers SMSes. If you are window shopping at car marts (which I don’t recommend, personally I find it a waste of time), please make sure you already have a price in mind and sound the seller out before you go on to inspect the vehicle.

  1. Do your research

Find what kind of prices the sellers in the market are asking for. Be realistic about your price in mind. If most people are asking for $12000/year, one or two are asking for $10000/year, and some asking for $15000/year for the same model of similar age, chances are you won’t find anyone willing to let you view their cars when you offer them $6000/year. This goes back to the point above. If you are not upfront about the price you are willing to pay for the car, you will just end up wasting your time and the seller’s time.

With the few online car marts that we have, it’s really easy to narrow down a reasonable budget for the car that you want.

  1. Do your pre-viewing homework

Let’s say you manage to find a car that fits your budget. Contact the seller, ask him for details regarding the car. This will save you some time during the inspection. Usually, I will ask for the items listed under the documentation section of the checklist. Remind the seller to make sure the service records are available during your viewing. I like cars with a full service history, but I realise this is very rare in Singapore. The next best thing is to have service records for the past 3-4 years.

  1. Don’t trust the seller

This is not intended to mean that all sellers are untrustworthy. In fact, most of the sellers that I have dealt with are generally honest about their vehicles. But just to protect yourself, just assume the car is problematic. If you cannot find evidence that the car is well treated (e.g. regular servicing, no strange noises, original paint job), assume something happened to that part of the car. If the seller says something, ask for proof.

During viewing

There are a number of things to look out for. Some are very straightforward, some requires more effort and getting down on your hands and knees. There are many things you can check. For me, I have broadly classified these into 8 categories. Some categories has more details than others. Of all the items listed, with the exception of #7 Bottom (undercarriage checks), I would say everything else can be checked by you without the need of a car lift.

Give yourself a good 60 minutes when viewing the car. You should not be aiming to look at as many cars as possible in the shortest amount of time. Instead of looking at 30 cars in 3 hours, what you need to do is to use 2 hours carefully looking at 2 to 3 cars. These cars should be cars within your budget, 1 or 2 owners, with full service history and no accidents.

Personally, I am comfortable with mileage vehicles as long as proper maintenance has been done. In fact, for two cars of a similar age, you might be getting a better deal buying a 160000km car compared to a 100000km car. The 160k km car could have gone through a thorough big inspection with the authorised dealer with many parts replaced, while the “lower” mileage car have parts that are not replaced which might require you to eventually replace many of those components, paying out of your own pocket.

Do not be tempted by a nice shiny coat of paint. Many used car sellers like to send the cars for a quick spray job. These cheap jobs costs $500-600 dollars, looks good but chips easily. A well maintained original paintjob is a sign that the previous owner takes good care of the car.

Going back to an earlier point about not trusting the seller, here are some examples:

  • If he only has one key now, but tells you he has another key somewhere, assume there is only one key.
  • If he says some things can be fixed easily and he will fix it for you if you buy the car, assume (1) he will not fix it, (2) it cannot be fixed easily.
  • If he says the car has not been in any accident, judge for yourself. Don’t take his word for it.
  • If he says the car was just serviced and show you the sticker on the windscreen, but no receipts, assume it was not serviced recently.

What you see is what you get. Don’t let your desire to buy the car you want cloud your judgement. Take your time to slowly digest what you see.

Here are some things to bring along to help you during the inspection:

  • Latex gloves (to keep your hands clean)
  • Tissue paper (to check engine oil level and to wipe your sweat/hands)
  • Torchlight (a small torch is much handier than using your handphone)
  • Pen and paper (to take notes, such as chassis number, car number for insurance quote)
  • Weebee Used Car Purchase Inspection Checklist
  • IC & driving license
  • ATM card (to withdraw money for car deposit)

So here it is, you can refer to the attached checklist on the things to look out for during your viewing. In the next post, I will round up this guide with some post-viewing tips.

p.s. Despite what I said about maintenance records and number of ex owners, I have bought cars that have no service history and have gone through more owners than fingers on my hands. It all comes down to the price of the car. If it’s half the depreciation of the next available car, you could still end up getting a “good” deal if you know what you are getting yourself into,

Post-viewing tips

Remember the very first tip that you saw about having a price in mind?

As buyers, we all want the best deal, we want to pay as little as we can for as much car as we can get. This is why having that price in mind is important. To save ourselves some dignity, let’s not bargain over the price of a car like we are buying fish at a wet market. If the car already meets your target annual depreciation and you are satisfied with the condition of the car, make an offer for it.

For a start, although I may be comfortable matching the seller’s asking price, I will still offer 10-20% below my target depreciation, just to test the water. If the seller agrees for some reason, MAI TU LIAO! If not, ask for a counter offer. I will then counter offer a price that is slightly below the average of his counter offer and my price in mind. The seller will then usually come up with another counter offer higher than my 2nd offer. At this point, since the 2nd counter offer from the seller is still below your target price, you should be a reasonable buyer and secure the deal.

Once you are satisfied with the price, secure the deal with a deposit. A verbal agreement is worthless and not legally binding. Here is what you should do:

  • Ask him to drive you to the ATM, draw $500 and put it down as deposit.
  • Fill the transaction forms from sgcarmart and make a copy for each of you. (The dealer should have it, if it’s from direct seller, prepare the form before you view the car.)
  • Take a photo/photocopy of the seller’s IC as well to go along with the deposit form.
  • Arrange for a time to meet at LTA.
  • Prepare your money before the meeting, the norm is for a cashier order. (If you want to do internet transfer on the spot, make sure the seller is agreeable to the arrangement. Do a test transfer before meeting up to make sure the money can go through. I tend to transfer the money only when the LTA officer is processing / has processed the transfer.)
  • Source for insurance and bring a printout of the insurance certificate for your “new” vehicle.
  • Go to LTA early with your ICs.
  • Download the transfer form from LTA website and fill in the transfer forms before going to LTA.
  • If you want, inspect the car again just before doing the transfer, just to make sure what you paid deposit for is what you get on the day of transfer.

I’ve added one item to the checklist, so here’s v1.01.

Weebee Used Car Purchase Inspection Checklist v1.01

Used Car Purchase Inspection Checklist (PDF File Download)

Post-purchase tips / Lemon law

I find that some people may not be fully prepared when they are buying used vehicles. Even brand new cars can have problems, so we should not expect used cars to be flawless. Some things are wear and tear items, some things are not. When buying a used car, I usually set aside $2000 to buffer for wear and tear replacement if it’s a car that still have a few years to go before scrapping or COE renewal.

After buying a used vehicle, if there are no service history, I have a habit of changing the engine oil, transmission oil, differential oil, brake fluid, coolant, brake pads, accessory belt and water pump. There is no timing belt to change because I only buy vehicles with chain-driven engines, but if you buy cars that require timing belt replacement, please check if that has been changed. A snapped timing belt usually means an engine replacement for most cars.

The following are what I think are wear and tear items, i.e. as-is condition, what you see is what you get. These are items which I think should not be paid for by the dealers and should not be covered by the lemon law:

  • Bulbs
  • Tyres
  • Batteries
  • Brake pads
  • All kinds of fluids
  • Wheel bearings
  • Engine / gearbox mounts
  • Bushings and control arms
  • Suspensions
  • Sensors
  • Spark plugs
  • Spark plug wires
  • Cosmetic wear and tear (interior & exterior)

The following items are what I think are grey areas:

  • Steering rack
  • Fuel pump
  • Injectors
  • Ignition coil
  • Oil pan gasket leaks
  • Valve cover gasket leaks
  • Exhaust
  • Subframes

The following items are what I think should be covered by dealers:

  • Engine
  • Gearbox
  • Drive shaft

In general, if you want to be absolutely safe, have your mechanic check the vehicle on a lift. Do a thorough check on the undercarriage. Remove all undercarriage covers and inspect the components in detail. If there are issues with any of the components listed above, either look for another car or price in the replacement and repair costs for those parts.

However, if you buy from a direct seller, what you see is what you get. Don’t expect warranty or follow ups. As a rule of thumb, you should not be paying a direct seller the same price as a dealer. Price in a $2-3k discount for wear and tear replacement when coming up with that price in mind for the cars that you are interested in. There are a number of dealers who pretend to be direct seller. It is OK to buy from them, but make sure you lowball them so as to price in the risks that you are taking. If the car is genuinely OK, there is no reason why the dealers should disguise themselves as direct seller.

Ok, so that’s about it for now. I hope this guide will be useful to the car buyers out there who have not yet developed a standard car buying procedure.