Half of all used cars are bought and sold privately and if you do your homework you can get a decent car at a good price. But many people get confused when it comes to the finance side – how much to pay, how to find a loan that won’t rip you off and how to not waste cash on a lemon.

How much to pay

First, you need to work out a realistic price range for the car you want by looking at similar cars in classifieds and on websites.
You should also make a beeline for NRMA Motoring and get a detailed Glass’s Guide valuation from ValuEMAIL (for $11), and also check the Used Car Safety Ratings (UCSR) to make sure your dream car isn’t a death trap. (For our best and worst picks of 2006, see box below.)

Before you start pounding the pavement, make sure you read Open Road’s comprehensive guide to buying a used car. It gives you valuable information on all the costs you need to consider, as well as test driving tips, negotiating a deal, leaving a deposit and transferring rego.

Finding a loan

With your research done, you’ll need to make sure you’re financially ready, as you’ll have more bargaining power if you front up with cash.

But if you don’t have the ready cash, especially if you’re a young driver buying your first car, you’ll need to apply for a loan. Set your price range and work out how much you can repay monthly or weekly before you apply for the loan. If you’re not sure how to work it out, use the easy loan cost calculator or call 1300 116 762 for advice.

NRMA Motoring & Services recently launched its own Used Car Loan that offers low interest rates, flexible repayment terms of up to seven years and affordable repayments on used cars purchased privately. NRMA Car Loans* has fixed rates so you’ll always know how much your repayments will be. There are no hidden or additional monthly account-keeping fees and you can pay your loan off sooner at no extra cost.

Avoid a lemon

Once you’ve found your dream car, and before you hand over any cash, make sure you get the car checked out with an NRMA Vehicle Inspection (to book, call 13 11 22). Otherwise, if you’ve unwittingly landed a lemon the money that is better spent repaying your loan could end up paying for costly repairs.

Also, get a REVS check to find out if there’s any finance owing on the car (as it could be repossessed after you’ve paid for it); if it’s stolen; or if it’s an illegally repaired write-off. NRMA Car Loans automatically does this, so an NRMA Vehicle Inspection together with an NRMA Used Car Loan can reduce the risk of a bad buy. For details on NRMA Car Loans, see box.

How to get a Loan through NRMA

You can apply for a Used Car Loan from NRMA Car Loans over the phone. Before you call you should have the following handy:

• Proof of income – your two most recent payslips or, if you are self-employed, your last two annual financial statements;
• Other loans – details of any other loans you have;
• Car details – an idea of the type and value of the car you are looking for. If you’ve already found your new car, try and get a copy of the car’s registration papers (if available);
• Current drivers licence – for details such as your licence number; and
• NRMA Member number – the seven-digit number that appears on your Member card.

You’ll get pre-approval within four hours, which means you have more bargaining power to get the best deal and will be on the road sooner. Visit NRMA Car Loans or call 1300 116 762.

*NRMA trademark used under licence from IAG, owner of the trademark for financial services.