Wednesday, May 21, 2008

How to obtain finance and leasing for used cars

There are two ways/methods of purchasing a car in CR: cash and financing.

In this respect, the purchase of a new and used car is nearly identical. There is one important difference, and I’ll address that difference below


In the CR, there is a law on the books which states that no business can accept a cash deal over 15,000EUR (about 450,000kc). Any transaction above this figure must be carried out via bank transfer. For reasons that I do not know, this does not apply to the car industry. Dear Reader, go ahead bring a bucket full of cash. It is clean and legal to buy a car this way.


It isn’t quite so incredibly easy for non Czechs to purchase a car here in CR. I know the EU laws mandate free movement of labor and possessions, but the Czech Dopravni Inspekorat (Traffic Police) will not register a car to anyone who does not posses a registered Czech address. Therefore, one must have a living permit, a working permit or a trvaly pobyt (permanent residence) in order to purchase a car. Sorry, having a lease on property in your name does not suffice.

So how do you get that car?
1—Provide the above documentation
2—Get a really close and TRUSTED friend or family member who does have the above documentation to purchase the car (but in this case, they are the legal owner of the car, not you).
3—Have a Czech registered company to purchase the other words make the car a company car/fleet car (This is quite easy, any one with power of attorney ...plna moc.. can make the purchase on behalf of any Czech registered firm) Remember, get an accountant to help claim the car on amortization.

Be aware that all car dealers (new and used) get commissions from the lease companies on every deal they make. Entire average for all Central Europe is 13% of the price of the car, but in CR some dealers are making a whopping 25% commission on each deal they sell. That is money you do not have to pay.

Example: if you lease a car for 100.000kc at 10% for 5 years. Just for easy math, that makes this example a car that you can get for 150.000kc over 5 years. But if a dealer takes 20% commission fees, now you are looking at 170.000kc over 5 years. Again, this is not exact, just an illustration.

You have a very good chance to push hard against the dealer. Make sure that no fees are included in the lease contract. Do not let the dealer stick you with admin fees, or transfer fees, or STK fees...anything like that is pure money in the dealers' pockets. Keep that money in your pocket. Believe me, the dealer will cave in. In this soft market, spring and summer 2008, the dealers are fighting for every deal. They will give in.

What type of financing products are available to Expats?

--Down deposits, called Akontace, can range from 0 to 70%
--Lease contracts can range from 1 year to 8 years (new cars 8 years, 1-2 year old cars can get 7 year lease deals. Cars older than 3 years can get 5 year lease deals)
--Insurance can be part of the lease contract...this is usually a good idea, unless you really have your heart on paying all insurance premiums immediately upon purchase

All cars must have povenne rucine. This is third party insurance. There is no room for negotiation. This is by law, based entirely on the size of the motor. Price, year and model have no effect on this insurance.

There are many other insurance products, havarni insurance is crash insurance, and this is a good is theft insurance because every year CR sees 25,000 car get stolen...One car every 8 minutes.

The CR is filled with varying insurance companies, and you can shop around and get yourself good deals out there.

Please note: some insurance companies will base the price of insurance on brand new cars...even if the car is 3,5,7 years old! Some insurance companies will offer the coverage based on the year of the car itself (for example paying 2004 rates for 2004 model). You must ask this from your dealer! Again, it pays to shop around

Ok, back to types of financing for Expats:

--Ballon payments. These are a really hot ticket right now, especially for companies and fleet cars. You spread 70% of lease payments over the first 3 to 5 years (whatever the lease length is) then you pay the final 30% in one last payment. This is a huge win-win. The customer can part exchange the car on that last payment, and the dealers get a "new" used car to sell. You can easily see why companies love this, as they have to resupply their fleet cars every so often and this is a great way to keep costs down...sure is better than buying a new car every year. Easily obtainable for individuals as well.

--Rates from the lease companies are as low as 6.9%, but you must have certain levels of income for this. Often the CR has 12% or so, but you can push this down to 8% if you take the time to shop around.

Last note:

In order to get leasing, companies and individuals will have to provide some sort of "proof of income". It can be tax statements from CR or bank accounts from any country.
This information must be provided with the documents I described above.

Monday, May 19, 2008

How to take an intelligent test drive of a used car

Test Drives and Putting the car up on a ramp

There is an old saying that goes something like this: Bums in seats sells cars.

I would like to amend that saying just a bit to: If you aren’t comfortable on a test drive, you will never be comfortable at all in the car.

Please, do not ever under value nor underestimate the importance of subjectivity in buying a car. For a vast majority of people, a car is the second largest expense/investment they will make in their lives (trailing only a home or flat). With that perspective, I would like to give you some ideas on how to increase the chances that you will be happy with your second largest investment


If you have the luxury of a car lift, actually grab the front tire in your hands and give it a good shake. The wheel must „feel“ firmly connected/secured to the axel. There should be no give at all between wheel and mounting to the axle.

Look under the body/chassis. All welds/joints should be same color. If not, the car has been very severely smashed. Most likely the car is now made up from two or even multiple cars.

Look on the underside of the motor. Look specifically for oil streaks or oil leaking from any of the engine joints. This reflects a car in need of major motor repair. You should also look to the underside of the transmission to see if any damage is noticeable to the eye

Look carefully at brake discs. You probably can‘t tell if they are sufficient thickness, but you can easily see edges, scratches or grooves in the discs that will assuredly affect negatively their performance

Shock absorbers should be dry, without any leaking from the filling.

Exhaust pipe must have No corrosion, and the joints/welds should appear the very same color as the rest of the underside of the car. Please note, new EU rules mandate that the catalytic converter must be functional or the car will not get the STK, as it will not pass emission standards. This is costly to repair and you will fail STK inspection

2-How to take an efficient and intelligent test drive

Test the motor first, start driving slowly, motor should be smooth and have no vibrations. Accelerate slowly up to maximum revolutions (but keep it below red line). The engine stroke should feature no delays or loss of performance. NOTE: if engine is equipped with turbo charger, it does take a moment or two to for the turbo to engage, then you can obviously notice the increase in engine power and performance.


All gears should be changed easily, smoothly and precisely. Test the gear shifting in a slow and calm drive as well as in sport or hard other words you should notice no difference in gear shifting at low and at high rpm’s.


Listen carefully when changing gears., if you hear total silence, that may mean response is not immediate. Shifts between gears should be smooth without vibrations. If you feel any vibration, there is a serious problem with the transmission or gear box

Wheel toe

The oldest trick in the book is for a salesman to drive on a flat piece of road and take his hands of steering wheel and say „look, no drifting from side to side, perfectly balanced“ They invariably have the tops of their knees jammed up against the steering column.

Please do this yourself, drive the car on a flat piece of road, and drive with your hands off wheel (20 meters is enough), and make sure the car does not drag from side to side. Do not ever believe claims by salesmen of „it is only a low pressure tire or it needs balancing.“ You are asking for trouble if you believe him


Brake testing is vital part of test drive. Don’t let a salesman do this, you must (just make sure no car is behind you!) Get up to high speed on a flat stretch of road, and stamp hard on the brakes. Do not jerk them, but maintain constant pressure.

Be aware of knocks, vibrations and car pulling to one side or another. If any of this is apparent, expect high repair costs.

Again: Do not believe any story by salesman about tires or balance. Do not trust a car that does not brake straight on a flat road.

Half shaft/axles

A tried and true test is to turn the car in circles as tight as possible. Hold the steering wheel tight and turn, around and around in 360s. First start slowly, then accelerate slowly to a fair speed. There should be no unusual sounds, if you hear clicking or cracking sounds the CV joint or half shaft are in need of repair Loud squeaking is a sure sign of trouble.. Make these 360s in both directions. All dealers buying cars do this, so should you.

Wheel bearings

Another old trick, drive at safe speed and swivel car from side to side, listen for a roaring noise, if observable, the wheel bearings need replacing

Exhaust and Catalytic converter

Listen for any clanging or ringing sound from under the car or from the rear, if you hear silence, everything should be ok, if you hear the clanging, that means loose or broken parts and you can be assured you will fail STK inspection

Shock absorbers

Before or after the test drive, step on the mud guard or step plate of the car as close to shocks as possible. Step on it as if you want to see it „swing“ from side to side. Step off and watch closely. If it stops swinging immediately, good. If it does rock back and forth a couple of times after you step off, you have a problem within shocks, stabilizers or suspension or any case it is going to be expensive.

How to make a Techincal Inspection of Used Cars

In the second of a four part series, Ciaran Kelly will help Expats avoid the pitfalls and pratfalls of buying a used car in CR.

Today’s issue: how to perform a mechanical check on a car, especially if you aren’t a mechanic.

Mechanical Quality of Used Cars

According to the Dopravni Inspecktorat (Czech traffic police), 70% of all cars in CR have had some type of body or motor repair. The percentage is even higher for imported cars into CR.

Here are some tips on how to determine the technical quality of a used car

1—Use your eyes

Look for production plates, tags or stickers with service data. Many legitimate repair garages now actually marking/writing down either on the motor or on driver doors, the kms of their inspection. Use that and compare it with the kilometers on the odometer.

Also, run your finger along all the spaces between the panels, for example between the hood and fender. The spacing should be even, cars that have been smashed usually have spacing that is not equal. Try it on your car now. Run your finger along the space between hood and fender. It is easy, and you can’t be fooled. Do this on the hood, all doors, fenders and the trunk (boot)

Finally, ask to look under the hood (bonnet). Look at screws/bolts used to mount the motor to car frame. All those screws and bolts are painted by the factory. If any bolts are not painted, they have been taken out at some point in the car’s history.


Look closely under a florescent lamp or out in bright daylight. You will be able to see variations in paint color and shading and also graining in the paint itself if a car has had body work.
An old trick that still works, is to take out a large handkerchief, place it somewhere on the car body, then place a magnet in the middle of the kerchief. Drag the kerchief along the entire panel, if the magnet ever falls off, viola! The car has bonding and not metal, therefore it has been smashed.

3—Original Joints and Body Cementing

Open the hood and trunk; do not be afraid to remove all carpets, plastic covers and the spare wheel. You will be able to see the internal joints (welds) of the body frame. The joints are nowadays made exclusively by machines and robots, they should appear perfectly symmetrical, if not, the car has been severely smashed.


Closely look at fabric or leather of the seats. Small holes in seats means a smoker used the car. Leather and fabric will eventually crack and split, if so this means car probably has more than 130,000km on it.

Check the steering wheel. Most cars use a pilled or bumpy and grainy wheel grip. If this appears smooth in the classic „ten to two“ or „quarter to three“ positions of the steering wheel, you can bet the car has over 150,000km...maybe 200,000km.

Ditto the brake, clutch and accelerator pedals. They start to look smooth and worn down after 150,000km.

Beware of any car that has a smooth or dull looking stick shift, or if the material surrounding the stick shift is ripped or worn looking.

Cars usually do not show wear in any of these interior places until after the 80,000km mark

One last note on doesn’t happen much these days, but after the floods of ‘02 some people tried dumping their flooded cars on the market. You can tell if a car has been flooded by removing the water lining of a side door (it is normally a black band used to keep rain out). Any difference in appearance of paint under the band will show clearly that car was submerged.


Common sense here will go a long way. Make sure all head, brake and interior lights, blinkers and control panel indicators actually function. Be wary of any headlamps that make a noise when turned on. If a car has A/C, also check that twice, once when the motor is off and once again during test drive.


Very under rated source of safety issues can be found here. Only experts can look at a tire and determine how many km’s are on it. But you can look to see if the tire wear is even. If not, for example the inside is wearing faster than outside of tire, this tells you there may be a problem with alignment or worse, something is amiss with the axle, shocks or suspension.


One dirty trick the importers are using these days:

Turn the key to first position. All indicator lights on the dash board go on (including airbag light). These should all turn off gradually...I repeat gradually turn themselves off. If all of them go off together at once, or if the airbag light goes off with another light at same time, that means the airbag light switch has been re-connected to another fuse. The airbags have, in fact, been blown already. Car has been severely smashed. On a car with perfectly functional airbags, the air bag light should be the last remaining dash board light to turn itself off after you start ignition.

You can also look closely to airbag position in the dash board itself. Just like point 1 above, run your finger over the spacing between airbag location and cover, the spacing should be perfectly even…any gap increase or decrease should tell you that air bag is blown.

On steering wheels, place your finger right in the middle of the steering wheel and push hard. It should feel like a solid wall to you, if the steering wheel “pushes” in, the airbag is not there. Also, AIRBAG or AIRBAG – SRS should be written on the steering wheel. If not, the steering wheel is not original.


Same as earlier, open hood/bonnet and look closely at the bolts/screws. Before starting the motor, open the water tank and place your finger into the water, then remove your finger. If your finger is dirty or black, oil is leaking because the sealing behind the heads is cracked. The motor should look clean and dry, it is not a disaster if the motor is dirty, but if you spot OIL on it, then you will have trouble

The engine should start simply by turning the key. Do not trust any engine which needs to step on the accelerator to start. Engine should start immediately. Focus on its operation; leave it running at a standstill. Listen for knocking sounds also take notice if car oscillates, that is increases or decreases rpm’s on its own. Remove oil cover and smell it. If you smell gasoline/diesel, there is a leak in fuel pumps.

After a ten minute test drive look for the mechanics stop light: Black, Blue and White. Keep the motor running and look closely at exhaust (you don’t have to smell it!) If you see blue smoke, piston rings let in oil in the cylinder, or the valves are leaking, in either case the engine is heavily worn out. If you see black smoke (with a diesel) the engine is worn and probably has a bad fuel pump. If you see white smoke, water is leaking in the cooling system, it may be a poor sealing or a broken head.

Friday, May 16, 2008

How to make a Legal Inspection of Used Cars

According to the Dopravni Inspecktorat (Czech traffic police), fraud involving used cars is up 70% this year alone. More than 500,000 cars on Czech roads today are either reported as stolen or are illegal (court liens, illegal docs or unpaid lease contracts).

Thanks to EU and Shengen rules, now it is easy to import unchecked, un-controlled cars into CR. The situation is getting so bad, a bill is now before parlaiment in order to place new restriction on car importers.

Here are some of the facts one should know about used cars in CR:

Police will seize cars, even with correct / legal documents in the following cases:

- VIN, chassis or engine numbers have been changed or modified
- Spare parts used on the car are reported as stolen
- If a crime was committed using the car in the past
- Any court case in which one of the two sides claims the car as their property
- To assist court executors or baliffs in a live case.
- Here are some pointers on how to determine if a car is „legal“ in the CR

Actual year of production can be found in codes all over the car... for example, wind screen, side windows, seat belts, seats, plastic parts, units, ABS, A/C , alternator and fluid tanks. The numbers should match exactly, if not, the car has either undergone repairs or worse.

VIN code (vehicle identification number): This is the birth number of the car. The VIN code must agree with the registration book (in Czech called the Velky Technicak). The VIN is usually embossed in the engine compartment, on a partition between the motor and the car frame, and also on the floor of the trunk (boot). It is quite easy to determine if the number has been re-welded, carved into or changed. If so, the car is not legal (hint: use a small hand mirror to look UNDER the VIN code...if it has been altered or changed, you will easily spot the marks under the number plate). Most cars now have a third VIN under the front windscreen, and these are very very difficult to replace or to change.

Remember, the engine type and VIN must both be entered on the car docs and the registration book (velky technicak) for every car since 2001. There are no legal exceptions to this law. If yiou find so much as one number amiss, do not purchase that car. It is illegal.

Verification of Car Origin:

This is the most important and complex procedure. Sorry to inform you, Dear Reader, but a single individual has no chance at all. It is very risky to buy a car on the street, be it through personal ads, subdealers, importers or unprofessional used car dealers—none of whom will guarantee car origin. You will need professional help who can guarantee the origin for you.

FYI Car orig includes: Dopravni Inspektorat registration, termination of registration, SPZ (license plates), date and history of all previous owners and registration, year of production and guarantee car is never reported as stolen. It is quite a list, and alas, no short cuts exist to find this info.

This is important considering the CR has an average of 25,000 stolen cars each year since accession in to EU. Some of the stolen cars go to chop shops for spare parts, some go abroad, but most are re-sold in CR (to the tune of 4 to 8 billion kc per anum)


Car origin should always be performed for each and every car imported into CR and every car that does not have the original registration

So who can you turn to to provide this service?

Professional used car dealers, Cebia and SOVA.

They all have Interpol contacts, contacts with all leasing companies (200 currently in CR) and direct acccess to police records at DI for VIN registrations. They also can measure paint thickness (stolen cars are often repainted).

What can YOU do?

--You can check any car in the database of the Ministry of Interior CR, go to

You can obtain their information via SPZ, motor number, VIN or the chassis number.

WARNING! This is only for car registered since 2004 and cars from CR. This will not carry any info any any imported vehicles from any year.

You can also go to:

both of whom have a great many contacts within the used car industry, and exist as customer service / consumer advocates.

Even with the aid of the above mentioned pages, you are not able to determine the following:

- Cars with an unpaid lease...well, I guess you can try calling all 200 leasing companies in CR to get this info.

- Court Liens, if a car has this, it will be taken away from you without compensation and you must try to sue the seller in court, a long and costly process

- Bankruptcies, court exectors in bankrpucy cases do have the legal right to take cars that are part of a bankprucy case, even after the car has been re-sold

- Stolen cars, police will seize any car that is reported as stolen, this makes all imoprted cars very suspect, especially if the car does not have original registration

- Divorce cases, this is no joke, 55% of all marriages in CR end up in court, and very often one partner will sell a car before the case is judged. These cars do get seized and then you must sue the offending divorcee to recoup your loses (if successful, this can be a 1-3 year porocess)

One would think that hiring a lawyer is necessary in order to buy a „clean“ car, but this is not the case. Many people find it easiest to go to professional and credible used car dealers. All of whom have one thing in comon, they will put in writing, in your sales contract, that they guarantee the legal history of the car.

Friday, May 9, 2008