Buying a car online

Car hunting? The Internet makes the job much easier. Forget Saturday mornings at the car yards, online you can now find car auctions and other trading portals. Make? Model? Mileage? Do all your research before even leaving the house. Now that is both time and fuel-efficient. Find what you want? Maybe you will even be brave enough to buy online…

Risks of buying a car online

Like all online purchases, there is always a potential risk involved with buying through the Internet. The biggest concern for buyers is fraud.

Unscrupulous sellers have been known to advertise items that are inferior or even don't exist. When buying from a nameless and faceless person there is always the risk that, after parting with thousands of dollars for your new car, it is never delivered.

When buying a car it's important to check it out mechanically as thoroughly as possibly. If the seller lives hundreds of kilometres away this could be extremely difficult, if not impossible, to do. You only have the seller's word regarding the condition of the car. Consumer laws state that sellers must give a true representation of the product when advertising, however this law is often abused.

Another fraudulent action that is sometimes used in online auctions is fake bidding to push up the price. Before making any offer, make sure you have a good idea how much the item is actually worth and watch out for suspicious activity.

It's also worth remembering that the Trade Practices Act means cars bought at online auctions are not covered by any form of statutory warranty. Warranties are offered at the discretion of the seller and second-hand cars generally do not come with a warranty.

You should also ensure that you are aware of any other fees that could apply if you are the winning bidder. Delivery fees for a vehicle as large as a car could push the price up massively, especially if it is on the other side of the country.

Is it worth the risk?

First of all, risks can be minimised: there are things you can do to protect yourself. Here are three useful tips.

One. Always use auction sites that have good reputations and study the rules of the site carefully. This is equally true for other online classifieds. Just because a site looks impressive it doesn't mean that it is professional or legitimate. Use other resources, such as the white pages, to check the validity of the company or site.

Two. Ask questions of the seller and check their selling record. Professional auction sites should make this information readily available to you. If the seller appears cagey or secretive, don't buy from them.

Three. For expensive items, such as cars, use an accredited escrow payment system. Escrow sites are third party sites that hold your payment until you have received the goods and are satisfied with the condition of them. (Take recommendations as to which escrow site to use and pick a well-known site found on many types of online shopping sites – not a small agent you have never heard of before).

Big savings weighed against risk

Buying a car by online auction can offer massive savings, if done right. Do your research and make yourself aware of the potential traps and you will go a long way towards covering yourself against fraud. If possible, only bid for cars that are in your local area and try to arrange for an independent safety and mechanical assessment. (Some people buy interstate and this can be the beginning of a big headache). Legitimate sellers should be fine with you arranging an inspection.

Above all, make sure you have done your homework. What’s it worth? What can you afford? Try not to get carried away with the excitement of the auction: make a mistake and you’ll be paying for it for a while to come. Be cautious, know your limits – and your merchandise – and take your time.