When buying a used car, we can all be victims of fraud. Olivia Olmedo, director of customer experience at OLX Autos México, a company dedicated to the purchase and sale of pre-owned models, could not escape the so-called hidden vices that a second-hand car can harbor. Before starting to work for the company, she purchased a vehicle with license plates from the State of Mexico, and although the model’s aesthetic and mechanical conditions were good, she had several traffic tickets in Mexico City. He realized this years later when he wanted to sell the car.
In Mexico, there is a vehicle fleet of around 30 million units and each year between six and seven million vehicles change owners. But most of the transactions – around 90% – occur between individuals, without their being registered with the SAT or with the Public Vehicle Registry. The only piece of paper left between the seller and the buyer is a “Letter of Assignment of Rights” that is purchased at the stationery store.
The informality with which these transactions occur, which generate around 60,000 million dollars a year in Mexico, means that eight out of 10 people who sell or buy a used car are victims of some type of fraud during the process. “The risk involved when selling or buying a used car is very high,” says Olmedo.
This year, the need to keep a “healthy distance” in the midst of the coronavirus pandemic boosted the second-hand car market, which became a more affordable option in the midst of the economic crisis that the virus unleashed to have a vehicle. . In the first months of confinement, credit requests for the purchase of second-hand models grew 10%, while those for new ones fell by the same proportion.
This trend continued during the following months. “The impact of the pandemic has been much less in our pre-owned car business than in the new one. While the sale of second-hand units has accumulated a drop of 13% so far this year, in the new vehicle business it is close to 30%,” says Edgar Estrada, general director of Volkswagen in Mexico, the automotive brand that sells the largest volume of pre-owned vehicles in the country.
“What do we see now? A more dynamic pre-owned market”, adds David García, national sales director for Kia Motors de México, a brand that in 2017 opened a new business unit for the sale of used cars.
Although in the last five years more alternatives have emerged for buying and selling used cars, both at brand dealerships and at the points of sale of new players that have entered the market, such as OLX Autos and Kavak, 90% of transactions still occur in the informal channel. For this reason, and to reduce the risk during the purchase of a pre-owned model, there are five best practices that specialists recommend:
1. Wheels, lights and exterior paint
The condition of the exterior paint, tires and wheels can give an idea of the care that vehicle has had. Checking that the tires are in good condition, that they are not smooth or cracked, is key to avoiding an accident in the future. Nobody wants to have a flat tire on the road or skid on a wet floor.
It is also advisable to check that the windshield wipers and brake lights are working properly.
In addition to this visual inspection, it is worth asking the seller if the vehicle has been in a major accident. “Contrary to what we think, people usually clarify the status of the car when we ask them,” says Olmedo.
2. Watch out for noise and leaks
In addition to this visual inspection of the exterior of the vehicle, Olmedo recommends doing a mechanical review before buying a pre-owned vehicle. “Changing a gearbox can cost up to 60,000 pesos, so it is one of the aspects that must be taken care of.”
Among all the imperfections that a vehicle could have inside, such as worn trim or plastics, what the buyer should focus on is ruling out problems with the engine, transmission, steering and suspension.
Ideally, the inspection should be done by a professional mechanic, but if it doesn’t happen, it’s a good idea to do at least a short test drive to detect engine, suspension, or gearbox noises. It is also important to check for oil or antifreeze leaks.
3. Altered mileage, better run away
One of the aspects that can give an idea of the wear that the vehicle has had, regardless of its model year, is the mileage. Even the guarantee offered by some brands is based on this. Kia, for example, offers a bumper-to-bumper warranty of five years or 100,000 kilometers, whichever comes first, regardless of whether the vehicle changes hands.
But since mileage has a direct impact on the price of a vehicle, there are people who may be tempted to alter it in order to improve the resale value of their unit. However, this can bring a lot of headaches to the new owner, as this voids the warranty with the manufacturer and disrupts the unit’s repair cycles. How will the owner know when to change the timing belt – which should happen every 60,000 kilometers – if the odometer is altered.
Although the specialist says that it is difficult to detect at first glance if the mileage is altered, there are signs that can give the buyer an idea that this has occurred. The wear on the steering wheel, on the driver’s seat and on the gear lever indicate that this car has been given more intensive use than another that does not show wear on these parts.
“If a car has a worn steering wheel, gnawed trim and a broken gear lever cover, but reports a mileage of less than 50,000 kilometers, you have to be careful,” says Olmedo.
4. Complete documents
Buying a vehicle with incomplete documentation can cause as many headaches as mechanical failures. To make the change of ownership, for example, several documents must be presented, such as proof of payment for the last five tenures, the car invoice or the circulation card. Not having them can cause delays in the procedures or the payment of fines and surcharges.
To avoid problems, Olmedo advises to do, in addition to a mechanical physical review of the unit, a verification of the document file to ensure that the receipts of at least the last five holdings are not missing, the last verification stub, the original invoice and the current circulation card.
A plus would be to also have proof of services performed in previous years, either at the dealership or at an authorized workshop.
5. Make the owner change
The last item on the checklist that the buyer of a second-hand car must do is to verify that the model does not have outstanding hidden fines, which is usually very common when the models have plates from some other state.
For example, whoever buys a car with license plates from the State of Mexico or Morelos, must verify that these models do not have pending fines in Mexico City, since it is very common for people to register vehicles in these two states even if they live in the capital. from the country. Not verifying this can cause the new owner to have to pay these debts in order to carry out some other procedure.
Olmedo also recommends changing ownership. This suits both the seller and the buyer. The first is released from any misuse that could be given to the unit once it ceases to be his property, while the second can be up to date on the fines for his vehicle.
Finally, it is advisable to find a safe place to deliver the unit and pay. It may be in a banking institution in order to guarantee a secure transaction. Another person may be responsible for the documents. “It is not recommended to accept checks or cash,” says Olmedo.
Those interested in buying a pre-owned vehicle can also resort to the formal channel, such as a dealership or with a company dedicated to the sale of pre-owned cars, which even offer financing and take care of the owner change procedures.
