After arriving in Australia, many people are eager to buy a car of their own for getting around. Australia’s second-hand car market is very active; a new car bought at a high price often depreciates quickly, while a used car is comparatively more “value for money”. At the same time, because newcomers are unfamiliar with Australian roads and traffic rules and not yet used to right-hand drive, many people also choose to first buy an affordable used car. Australia has a relatively mature and well-established second-hand car market, which strengthens the protections for used-car buyers. Using Sydney as an example, this article introduces some basic legal knowledge about buying and selling used cars, to help you more smoothly and confidently purchase the second-hand car you want.
In New South Wales, the laws governing used-car transactions mainly include the Motor Dealers and Repairers Act 2013 and the Australian Consumer Law. Which law applies mainly depends on who the seller of the used car is. In Sydney, there are various channels for buying a used car, including purchasing from licensed dealers, buying through car-sale websites or auction sites, and so on. These channels differ, and so do the corresponding used-car laws, so which law applies has to be determined based on who the seller is.
From A Dealer — Buying a Used Car from a Dealer
If you buy a used car from a dealer, the dealer bears the following responsibilities:
Mandatory disclosure
Under the Australian Consumer Law, a dealer must disclose to the buyer information that may affect the transaction, because such information may influence the buyer’s decision to purchase the car or their judgement of the price. This information must be included in the Dealer Notice, including but not limited to:
- any major modifications;
- whether the vehicle has suffered flood or hail damage;
- whether the vehicle has previously been written off;
- whether the odometer has been tampered with.
Dealer Guarantee
When buying from a used-car dealer, the law generally requires the dealer to provide a certain “warranty period” — that is, a dealer guarantee. The warranty period is usually 3 months or 5,000 kilometres, whichever occurs first.
However, the dealer guarantee does not apply in the following circumstances:
- the vehicle sold is unregistered and requires major repairs;
- incidental or accidental damage occurs after the sale while the vehicle is not in the dealer’s possession;
- damage is caused to the vehicle by driver negligence or improper use;
- surface damage to the paintwork or interior of the vehicle was readily apparent on reasonable inspection at the time of sale;
- the vehicle is accompanied by a prescribed defect notice and inspection report, including an estimate of the cost of repairs.
At the same time, note that to be entitled to the warranty, you must also have a Form 5 at the time of purchase, and the used car’s mileage must not exceed 160,000 kilometres and the vehicle must not be more than 10 years old.
Compensation Fund
The Motor Dealers & Repairers Compensation Fund is a compensation fund for motor dealers and repairers.
When attempts to recover money from a licensed repairer or dealer have failed, consumers can make a claim from this fund. This includes the following situations:
- the dealer has failed to honour warranty obligations;
- the dealer has sold a person an encumbered vehicle (for example, a stolen vehicle);
- the dealer has failed to refund a deposit;
- the dealer has failed to pass on the proceeds of sale of a vehicle sold on that person’s behalf;
- repairs were unsatisfactory.
The maximum amount of compensation is AUD 40,000, and a claim must be made within 12 months of the loss occurring.
Compensation Orders
If, after buying a used car, the buyer discovers that the vehicle’s year of manufacture, year of registration or model has been falsified, the buyer can apply to the court for a compensation order, ordering the used-car dealer to pay compensation.
If someone has altered the reading on the vehicle’s odometer before it was sold, or someone has fraudulently replaced the odometer, the consumer can also apply to the court for an order requiring compensation.
Buying a Used Car from a Private Seller
Ways of buying a used car from a private seller include used-car resale websites, Facebook Marketplace, or through friends. Buying from a private seller has some advantages — for example, because there is “no middleman taking a cut”, the price is usually more favourable. However, you still need to be careful.
If the vehicle comes from a private seller, under the Australian Consumer Law a privately sold used car must have clear title, but no dealer guarantee is provided. A Personal Property Securities Register check will reveal whether the vehicle is encumbered, stolen or unregistered. The buyer should request:
- the current vehicle registration documents;
- a safety inspection report (pink slip) no more than 6 weeks old;
- proof that the seller is the owner, such as a driver licence;
- the vehicle identification number (VIN) or chassis number;
- the buyer should then check that the details on the documents match the vehicle.
Final Thoughts
Even in Australia, where used-car transaction protections are relatively well-established, you should still take care to protect your legal rights when buying a used car. If you have any questions or need assistance, please contact our lawyers.
We have also written articles on Australian traffic laws and car-buying considerations — feel free to read them:
I bought a stolen car in Australia — what are the consequences? Who actually owns it?
NSW traffic offences and the corresponding penalties — some even experienced drivers don’t know
Using your phone for navigation while driving is also illegal? Can you use an iPad or Bluetooth?
