Buying a lemon—a car that’s discovered to have defects only after purchase—is every car buyer’s nightmare. With cost of living pressures, more Aussies are looking to trade in their vehicles for something more affordable. However, they need to stay vigilant and know how to spot a lemon before it’s too late.

With more than 50+ years of expertise working across all types of manufacturers, Carma - Australia’s fully digital pre-owned car platform - is revealing the red flags to avoid purchasing a lemon and the green flags to look out for. Carma’s team of automotive experts have looked at more than five thousand vehicles over the past three months and found that only a fraction of them were worthy of selling to buyers.

As part of our inspection process, we check everything from safety features down to fuses and filters. Over the past two decades, we’ve evaluated thousands of vehicles for conditional problems and would say four out of every five vehicles on the road have issues.

“The fact that 80-90% of vehicles have conditional problems can be concerning to the everyday buyer who doesn’t know how to tell the difference between aesthetic issues and mechanical or manufacturing problems,” said Peter Willis, Director of Buying. “This is why our team gets behind the wheel and under the bonnet of every vehicle we evaluate to see what mechanical work needs to be completed in order to function flawlessly.”

So how can you avoid purchasing a lemon? Here are some things you can look out for to protect yourself.

Red flags:

• A shady past: Buying a car is the second-biggest purchase many will make in their lives, which is why it’s important to check the vehicle’s OEM (Original Equipment Manufacturer) service passport to determine if the vehicle has been serviced regularly and on time. It can be easy to focus on the aesthetics, but before you get caught up in the features make sure you know what’s going on inside.
• Lots of baggage: Australia is one of the best destinations in the world for camping and road trips, but that can come at a cost. Heavy 4WD overloading, where people mount tents, racks and platform systems to their roofs, can make the vehicle overweight and impact long-term performance. An overloaded vehicle can impact its warranty status and insurance coverage, so it’s important to check this before purchasing.
• Overly private: Buying from a Licensed Dealer in New South Wales guarantees additional protections under the Australian Consumer Law (ACL) and Motor Dealers and Repairers Act (MDRA), including a three-month statutory warranty. However, buyers who purchase privately will not be covered by these protections.
• Expensive taste: It’s important to be mindful of the additional costs required when choosing an international brand. European makes can become quite costly to repair when the manufacturer’s warranty expires, so ask your dealer if they offer some level of extended coverage or warranty as part of the deal, but don’t forget to read the fine print.

Green flags:

• In it for the long run: Many people will look at mileage as the biggest indicator as to whether a vehicle is worth buying or not. However, 100 thousand kilometres on a Toyota, often voted one of the most trusted and dependable OEMs, is far different than 100 thousand kilometres in some of the newer models out there today. Look for older vehicles from trusted and reliable manufacturers (such as those in this report!) to ensure they stand the test of time.
• Lasts longer (warranties): Certain vehicle manufacturers offer extended warranties to stay competitive. Traditionally, a three-year warranty was all that you would see offered with the major manufacturers, however in recent years some brands have upgraded from three, to five, seven and even 10-year plans.
• Knows what they’re looking for: Look out for water leaks on small cars over 60,000 kms. While some leaks aren’t a major issue, if it’s not addressed quickly it can cause expensive and long-term issues. You should also look out for transmission problems with certain Utes after 50,000 kms. You can test this by checking whether the transmission slips gears, or has transmission fluid leaking.

Hugo and Pete’s top three recommendations:

1. Toyota

Toyota is synonymous with reliability, known for producing durable, low-maintenance vehicles that hold their value exceptionally well. Their commitment to quality engineering and efficient designs, like in models such as the Corolla and Camry, has built Toyota’s reputation for dependability over decades.

2. Hyundai

Hyundai combines affordability with impressive quality, offering vehicles that are both stylish and dependable. Their models come with comprehensive warranties, giving peace of mind to buyers. Known for their robust construction and advanced technology, Hyundai cars, like the Tucson and i30, offer consistent performance and longevity.

3. Mazda

Mazda focuses on craftsmanship and innovative engineering, producing cars that are as reliable as they are fun to drive. Models like the Mazda 3 and CX-5 are known for their lasting quality, strong resale value, and low repair frequency, making Mazda a go-to for drivers seeking style and dependability.