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How to Buy a Car Online

Heading to the Internet to find your next car is a great idea. Not only do you have more chance of finding that perfect car for you in a bigger market but you also have the perfect place to check price and condition to make sure you are getting the best deal available.

Online car buying is safe and easy when you follow some basic guidelines. The Internet has opened many doors for us and changed the way we do things. It's not uncommon for the entire purchasing process to take place online and over the phone. Buying a car online does present different challenges and opportunities than a traditional purchase.

Did you know that in 2013 nearly 60% of all vehicles sold were by private sale and the percentage is growing?

With mechanical warranties now available on private vehicles and the internet enabling easy contact between buyers & sellers you can save thousands on your next car whether you buy from a dealer or privately and still get all the protections that used to be exclusive to car dealer only sales.

Here is a quick guide to the Do's & Don't of online car buying from the team at Kick the Tyres. It's not all the answers but it is our general advice on saving money and getting the right car for you while cutting out the risks of a private sale.

  • The Importance of a Bill of Sale
  • Is money owing on the Vehicle?
  • Pre-Purchase inspections
  • How to spot a water damaged vehicle
  • Internet car sales scams
  • Completing the transaction

The Importance of a Bill of Sale

Thousands of private sale used cars change hands every month, and most of these transactions occur with no problems. Sometimes things don't go as planned though. If you find yourself in the unfortunate position of needing to contact a lawyer or even the Police about a car transaction gone bad, one of the first things they'll ask is whether you have a Bill of Sale.

WHAT IS A BILL OF SALE?

A bill of sale is a document that helps to confirm the transfer of ownership of property. By detailing the agreement made between seller and buyer, the bill of sale acts as evidence of a contract and is legally binding. Information often present on a bill of sale includes:

  • Year, make and model of the vehicle, as well as other descriptive information
  • The vehicle identification number (VIN) / vehicle registration number
  • Odometer reading (mileage)
  • Buyer contact and address information
  • Seller contact and address information
  • Date of the sale
  • Agreed upon purchase price
  • Signatures of both buyer and seller

This is only some of the information that can be included on a bill of sale. If the transaction includes any conditions, they should also be included. Is the sale dependent on anything like a suitable vehicle inspection or finance being approved? How many days the buyer has to complete an inspection, deposit details and any assurances made by the seller are all examples of additional information a Bill of Sale may include. It's very important that a bill of sale include as many details about the transaction as possible.

PROTECTION FOR BUYERS

Reading our Buyer Guide, you may have noted that there are few methods for a buyer to protect themselves in a long-distance transaction. This is why obtaining a Bill of Sale is so important. It's one of the few legal means that will allow the Police to get involved if your long-distance transaction goes wrong. You can use the bill of sale as proof of the agreements you and the seller made to each other. With a bill of sale, the buyer has an agreement in writing that they will receive the vehicle for a specified price. No money should ever be transferred before the buyer and seller have an agreed upon bill of sale.

You can write your own Bill of Sale or download our generic Bill of Sale here: DOWNLOAD

PROTECTION FOR SELLERS

A bill of sale protects the seller too. It may include lines that define the sale such as "as is," or "where is," which states the vehicle is being sold in its present condition and that it is the buyer's responsibility to arrange for the car to be picked up.

Remember; car dealers use bill of sale agreements (or vehicle offer and sale agreements) so each party knows what is expected from them. You should too.

Is there money owing on the Vehicle?

Every month in New Zealand, finance companies repossess cars where money is owed by a previous owner. In New Zealand, unlike other countries, any finance secured against a vehicle does not show on the VIR sheet (Vehicle Inspection Report).

Getting a guaranteed clear title was traditionally one of the benefits of buying from a Licensed Motor Vehicle Dealer, however at Kick the Tyres you can find out if a car has a security registered against it. This will be money owing on it from a previous owner and it stops you getting 100% clear ownership of that vehicle.

Make sure that you are getting a clear title on the car you are purchasing by asking Kick The Tyres for a PPSR (Personal Properties Security Register) check.

For additional security ask Kick The Tyres for a full VIR vehicle history check. This includes details such as;

  • Is the seller the registered owner?
  • Is the vehicle reported stolen?
  • Has the NZTA flagged the vehicle as being a flood damaged import or having a wound back or tampered odometer?
  • Are there outstanding Road User Charges?
  • And more important facts about the vehicle.

Pre Purchase Inspections

As knowledgeable as you might be, getting a second opinion from someone that makes a living putting cars through their paces is strongly recommended before putting serious money down on a vehicle.

The first step to getting an inspection is informing the seller you'd like to have the car inspected. Most sellers will be open to arranging an inspection. A helpful and cooperative seller is a good sign that the car is legitimate.

Once you have booked an inspection at www.kickthetyres.co.nz one of our inspectors will contact the seller and set up an appointment to complete the inspection. Typically, you'll know when the report will be available within 24 hours of placing the order, with the actual inspection taking place within a few days to a week depending on schedules and weather. After the inspection is complete, you'll receive by e-mail a full 146 point report, complete with all of the photographs the inspector took when completing the inspection. You can then call the inspector for a discussion about the vehicle if you wish.

Our inspections make sense as our inspectors are trained and experienced on what to look for. We remove the emotional involvement of checking the car. You get to love the car, we make sure it's a car worth loving.

How to spot a water damaged vehicle

Perhaps no other natural disaster is as feared among car owners than those that involve water. A car parked in the path of rising waters will likely join in the list of casualties and there are plenty of anecdotes about unscrupulous importers bring in water damaged cars from Asia only to sell them here for large profits as well as passing on ongoing mechanical problems for the new, unsuspecting owner. Even New Zealand new vehicles can be affected like those flooded with silt in the Christchurch earthquakes.

EFFECTS OF FLOOD DAMAGE

Make no mistake, any kind of water getting into places it wasn't meant to be is a bad thing where modern cars are concerned.

Mechanical and electrical parts are both affected adversely by water, and even though problems may not be immediately apparent, part failure could develop at any time. Rust and corrosion may not be readily apparent, but as time goes by, rust and corrosion on bolts and electrical connectors can get worse, even after the water has dried up. Dampness under the carpets and in the seats can cause dangerous moulds or bacteria to take root, and are nearly impossible to fully remove. Even if the car wasn't fully submerged, it doesn't take much for insurance companies to write the car off as unrepairable.

Unless you have experience dealing with problems that arise from damage caused by water, it's best to avoid flood-damaged vehicles.

IDENTIFYING WATER DAMAGE

The very best way to identify a water-damaged vehicle is to rely on an inspector with training.

However, if you're only casually interested, and you have the time and ability to look at the vehicle yourself, here are some things you'll want to look for when investigating a vehicle for flood damage.

  • Identifiers of water stains are a dead give-away. Look for dried rings or "tide" lines where water may have evaporated from. Evaporation of water or the steps taken to clean it can result in unnatural fading that can betray a history of water damage.
  • Mud or mould under the carpets or boot floor is a bad sign, and dampness not attributed to a leaking air conditioning pan is as well.
  • Look for evidence of water in places water would not normally reach. If the vehicle was submerged, water or silt may have collected on upper surfaces that shouldn't ever be exposed to these elements. Check areas in the engine bay, where cleaning up every part that can collect debris is difficult and time consuming.
  • Get under the vehicle and see if there is debris lodged in places it would be difficult to reach without the vehicle being submerged. Mud, sand, leaves and other types of debris can collect almost anywhere when the vehicle is underwater.
  • When looking at electrical components, watch for debris behind wiring or rusted connectors. Often wires that suffered flood damage will be dry and brittle as a result of water evaporation.
  • If the carpet has been recently cleaned, or the seats completely reupholstered, it could be a sign of flood damage. Be especially wary if these upgrades are not characteristic to how the rest of the car has been maintained.

Internet car sales scams

Arm yourself with the foreknowledge to recognize a scam before you fall victim to it. The utterance "There's a sucker born every minute," by David Hannum to his competitor, P.T. Barnum is an astonishingly true adage. It's easy to lose your good sense when confronted with a particularly good deal, or to look past seemingly small details when the prospect of getting something you've longed for is at hand. Don't let the "sucker" be you.

BUYERS BEWARE

Most of the risk involved in an online car purchase falls on the buyer. As the buyer, you're being asked to part with a large sum of money for a vehicle that the seller is promising to send you in return. That thought can be stressful and daunting, but there are ways to be sure you're making a smart decision. We discuss methods of payment in Completing the Transaction, and the benefits of getting a Pre-purchase inspection, as well as using a Bill of Sale. The last method of protecting yourself is to be aware of the scamming techniques you're most likely to encounter, so you can steer yourself around them.

TOO GOOD TO BE TRUE

One of the easiest ways to make someone do something rash is to make them think they're about to get a really good deal, and then put a time limit on it. It's the same tactic used by legitimate advertisers when they have flash sales. A scammer will list a car at a price that is just too good to pass up, and the buyer is prompted to act fast before someone else can scoop up the deal. Often a buyer will be in such a hurry to take advantage of the deal that they'll ignore the warning signs that they're about to lose a lot of money. Once the transfer of funds is made, the "seller" disappears, along with the vehicle that probably never existed in the first place. Remember, if it seems too good to be true... it probably is!

HOW TO AVOID

No deal is so good that you should ignore the basic steps required to protect yourself in an online deal. Have the car inspected by a reputable inspector, get a bill of sale, and use a trusted form of payment. When inquiring about the vehicle, be sure to ask detailed questions that someone who doesn't actually own the car would have difficulty answering. If the seller makes excuses as to why you or your inspector can't view the vehicle but requires you to pay now be very wary. Be wary of sales where the seller and the car are not in the same place. A common story told is of someone who recently relocated and needs to sell his or her car. While this can be legitimate, most people make these decisions about selling their car before they relocate. After all, think of the hassle involved. Buying a car is an expensive purchase. You want to be in a situation where you can inspect the used car in person and meet the car owner before any money changes hands

PHISHING

Phishing is a scamming technique that's been around since the beginning of financial institutions. In involves getting enough of your personal information to open credit accounts in your name or even gaining direct access to your banking accounts.
Over the internet, the most common way to do this is by providing a link to a fraudulent website designed to look like a legitimate one. A seller might ask you to use Paypal or Google Wallet, both legitimate services, and provide you with a link to the website in their e-mail. It's easy to add links to any bit of text though. Here's two links: www.kickthetyres.co.nz and www.kickthetyres.co.nz

phishingThe first brings you to our website, and the second to the Wikipedia page for the famous quote that started this article. Scammers will build a website that looks identical to the legitimate one, except that when you enter your information, it's being used by the scammer and not the service the website claims to be.

HOW TO AVOID

Never use links provided in an e-mail. If you accidentally clicked on an e-mail link and are worried about spyware having been installed, then run a spyware removal program, such as the ones included in a pay-for virus removal tool like Norton Anti-virus, or a free-to-use program like Super Anti Spyware.

ESCROW

A buyer wanting to protect their money is an understandable goal, which is why escrow services seem so appealing. They'll hold the funds as a third party agent and wait for the car to be shipped to the buyer. Once the buyer has a chance to inspect the car, the escrow service will release the funds to the seller.

While there are legitimate escrow services out there, the reality is that many escrow services are created by scammers so that they can recommend them to potential victims. There just isn't anything that an escrow service is offering that gets a seller interested. They are being asked to send their car to a buyer who may say no to the transaction and leave the seller with his unsold property on the other side of the country.

When a scammer uses this method, they set up the service to look legitimate, then recommend the buyer use it to help protect both of their interests. Once the buyer parts with their money, the seller and the service they recommended will both be closed for business, with no forwarding information.

HOW TO AVOID

Most legitimate sellers will have no interest in using an escrow service. If you're the buyer and are being asked to use an escrow service, especially one that a seller is recommending, then you should be cautious about moving forward with the sale. Investigate the service they're recommending, and see how open the seller would be to using a different service of your choosing. Be cautious of any links to an escrow service website for the same reasons we discussed in Phishing.

PROTECTION SERVICES

Similar to using a fictitious escrow service is the attempt to use a protection service. Be wary of any seller that tells you the transaction is guaranteed, as these services are rarely real. Sometimes the seller might use the name of a service that sounds legitimate, or maybe even is. Read the fine print, as many legitimate protection services will only insure a transaction for a small amount, or are restricted from being used in conjunction with vehicle purchases. If you go to them and say the car was never delivered, they'll tell you you're out of luck.

SELLERS BEWARE

Buyers aren't the only ones that get preyed upon by unscrupulous individuals. Here are some of the scams that plague sellers.

OVERPAYMENT

After agreeing upon a price, a "buyer" will send payment for the vehicle in question in the form of a cashier's check, but will overpay. They might say the extra funds are for the seller to arrange transport of the car using a transport company they've chosen, or even say that it was a mistake and would like for it to be refunded. Their goal is to take advantage of the fact that it takes time for a bank to determine if a check is legitimate.
Many people don't realize that a bank will release funds to you immediately, but will reclaim those funds if the check is determined to be fake. Victims of this scam will deposit the cashier's check into their account, see that the funds posted, and think everything is ok. They then follow the buyer's instructions and either return the money or make a payment to the transportation agent the buyer selected. The transportation company the buyer requests is a fake company the buyer uses to collect the funds the seller transferred. Weeks later, after the buyer has had time to disappear, the bank will inform the seller that they deposited a fraudulent check, and reclaim the funds, leaving the seller to pay out of their own pocket anything they gave to the transportation agent or returned to the seller.

HOW TO AVOID

Agreeing to a bill of sale, in which all parties have clearly listed who is responsible for what, and at what cost, is one way to help protect yourself from this. Another is to refuse acceptance for any amount that is over the agreed upon price. Force the buyer to send a new cashier's check for the correct amount. If you deposit a cashier's check from a seller, express your concerns to your bank, and they'll tell you how long you'll have to wait to be sure of the check's authenticity. Don't use any of your own funds to meet a buyer's demands until you know with absolute certainty that the check is good. Finally, don't agree to handle the transport of a vehicle on behalf of the buyer. Once you get the money for the vehicle, it is the new owner's responsibility to arrange transportation.

PHISHING

Phishing isn't only a buyer's problem. Be aware that many of the same methods for acquiring financial information from a buyer can work the other way around as well. Be cautious of any buyer that wants you to jump through hoops to sell a car to them.

GENERAL TIPS FOR BUYERS AND SELLERS

Thankfully, these occur with very little frequency, and most online transactions are completed without any problems. It does happen from time to time though, and familiarizing yourself with these instances is a good way to help you identify a scam. Most scams are just variations of the kinds listed in this article.

You can help to protect yourself from most scams by following these tips.

  • If you're new to buying privately, don't be afraid to talk to people that have had successful long-distance transactions before, especially if you're not comfortable with what a seller is asking you to do. Find out if it's normal from people that have experience.
  • Be wary of sellers and buyers that have requirements that seem complicated or out of the ordinary. If they start out by telling you they're on a long-term business trip in another country, you're better off just hanging up the phone.
  • Don't use links provided by the seller in an e-mail. If they're asking you to use Paypal (which is highly unusual to begin with), use an internet search engine to find the Paypal homepage, not the links in the e-mail.
  • If you're unfamiliar with any service the seller is asking you to use, do your research. Contact local business authorities and read reviews. Ask questions about the service from other car buyers and see if anyone has heard of or used the service before.
  • NEVER just take the seller's word for it.
  • Keep the lines of communication open. Ask to talk to them over the phone, or better yet, in-person. Pay attention to what they tell you, and don't be too ready to give them any information in return if you have any reservations. A seller that refuses to talk to you over the phone is deserving of your suspicions.
  • If the email the seller or buyer is using is a long line of randomly thrown together letters and numbers, you're probably looking at a throw-away email. Scammers have to make new e-mails for every person they attempt to victimize, and with so many people to hustle, their throw-away email addresses don't tend to be too creative.
  • If you can't see the car in-person yourself, get the vehicle inspected by a professional to be sure it's actually there. You can get the opinions of the inspector regarding the seller while they're at it.
  • Use a bill of sale to protect yourself legally.

Some of the best advice ever given to help protect you from being victimized is this: don't get greedy. It's easy to lose sight of good sense when the prospect of getting a phenomenal deal lands in your lap. Most of the time, a deal that's too good to be true is exactly that. Don't let a criminal pull the wool over your eyes by letting your own desire to get a good deal cloud your judgment.

The surest way to know you aren't being taken for a ride when buying a car online is to get an inspection. Along with a Bill of Sale, an inspection by a reliable inspector is the single best way to protect the interests of a buyer who can't see the vehicle in-person themselves.

Completing the transaction

The last steps of buying a car online introduce the most risk, requiring that a seller and buyer agree upon a payment and transaction method. Whether picking up the car in-person, or making use of services that facilitate long-distance transactions, you're going to want to know what's in store for you. If you've read the previous segments then you know the importance of being informed. Once you and the seller have agreed on a price then it's time to pay the money and collect the car. If you have found your car on TradeMe check the seller's feedback closely. If they have only done a low number of trades, or only trades for low value items then you should be cautious. Similarly, if they have a lot of negative feedback, you should inspect the vehicle closely before payment. Maybe you should collect the vehicle in person and pay when you are there. In fact, we think that everyone should consider this method of collection and payment.

This the point at which the NZTA requires both parties to make notification of the vehicle changing hands;

The buyer must complete a Notice by person acquiring motor vehicle form (MR13B), this must be taken in with suitable id and an acquisition of motor vehicle fee (currently $9.00 to a NZTA agent.

The seller must complete a Notice of person selling/disposing of motor vehicle form (MR13A) and post this back to the NZTA (details are on the form).

A seller won't part with the car until he has money in hand, and a buyer shouldn't part with any money unless a Bill of Sale has been received and agreed upon. This document is one of the few legal documents that can protect a buyer at this stage of a transaction. After a Bill of Sale is agreed upon, it'll be time for money to change hands. While there is more than one method to make a payment long-distance, the most commonly used method is direct bank transfer. Many sellers won't accept bank checks or cashier's checks because of the ease in which they can be forged. The internet is full of stories of sellers being scammed this way. A wire transfer is initiated and completed by a bank, and can be verified by the seller before he releases the car.

Once you've paid for the vehicle, ideally, you will arrange for you or your shipper to pick up the vehicle on the same day the money is changing hands, or very shortly after. You don't want your property remaining in the care of the previous owner any longer than necessary. And it is your property now. Most sellers won't risk additional liability once they're paid for the vehicle. In most cases, it will be the buyer's responsibility to arrange for transport of their new car to their home.

Traditionally, the best way to purchase a car has been to make the transaction in person. You hand the seller the money and he hands you the keys. No fuss. This may require you to buy a one-way plane ticket and fly to the location where the sale will be made. If you live close enough, you might have someone drive you there. You can make one final inspection of the vehicle, this time in person, and be sure of what you're getting. The best part is that once money has changed hands and the keys are yours, you can drive your new purchase home!

Don't let your emotions cloud your judgment, as you're about to put real money, and probably a lot of it, down on something you may not have seen in person. You're taking risks in doing so, but if you follow the tips provided above, and do your research, the process can be quite enjoyable, and not nearly as dangerous as it may seem.

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