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Department of Justice and Community Safety

INFORMATION FOR CONSUMERS ABOUT
BUYING A MOTOR VEHICLE

Motor vehicles account for a large amount of complaints handled by the ACT Office of Fair Trading. It is hoped the following information will provide consumers with advice in regards to buying a motor vehicle and dealing with motor vehicle repairers.

When you purchase a motor vehicle you will either buy it from a motor vehicle dealer, at an auction or privately. Your rights may differ depending on who you buy your vehicle from.

WATCH OUT FOR HIDDEN COSTS!

Shopping around and being informed is important for any purchase, but it is particularly important for the purchase of a motor vehicle. Doing your homework from the start may well save you money later. It will be beneficial to investigate the following on-going costs, as these will vary significantly with the type of vehicle you buy:

  • credit repayments;
  • insurance;
  • spare parts;
  • servicing; and
  • petrol usage.

BORROWING MONEY

If you need to borrow money, shop around for the best terms for a loan. Credit charges can significantly increase the cost of a vehicle.

Example

A $17,000 loan repaid at $132 per fortnight for 7 years will end up costing around $24,000. That equates to $7,000 more then the car is worth!

If you do need to borrow money, but are unsure of the likelihood of your loan being approved make sure you get the seller to write "SUBJECT TO FINANCE SATISFACTORY TO THE BUYER" on your receipt when paying a deposit for the vehicle.

This means that if your loan is not approved you are not obligated to purchase the vehicle.

 

BUYING FROM A MOTOR VEHICLE DEALER

When you purchase a vehicle from a motor vehicle dealer you are protected by the Sale of Motor Vehicles Act 1977. The principle benefits include a 'cooling off' period, guaranteed title and, in certain circumstances, warranty provisions.

Cooling Off Period

There is a three (3) clear business day cooling off period in which you may reconsider the purchase of a new or second hand motor vehicle.

Example
If you sign a purchase agreement on a Friday you have until close of business Wednesday to change your mind. Saturdays, Sundays and public holidays are not considered business days.

If you decide to terminate your agreement you must do so in writing to the dealer. Your written notice must be received within the three day period.

Deposits are not totally refundable if you change your mind - so be careful. If you terminate the purchase agreement, a dealer is legally entitled to retain $100 or 1% of the purchase price of the vehicle, whichever is the greater amount.

A consumer can only sign away the 3 day cooling off period if they sign a waiver immediately before taking delivery of the car/vehicle. Just signing a waiver OR taking delivery of the vehicle does not relinquish your cooling off rights.

Clear Title

A vehicle purchased from a motor vehicle dealer has clear title. This means you are protected against another party claiming a financial interest in the vehicle.

Warranty

The Sale of Motor Vehicle Act requires motor vehicle dealers, in certain circumstances, to provide warranty. This means that he or she must repair any defects that occur during the warranty period so that the car is in a reasonable condition relative to its age and distance travelled. A consumer receives a 3 month or 5,000km warranty on all second hand cars less than 10 years old and has done less than 160,000km.

Be aware that neither you nor the dealer can sign away your warranty rights.

 

BUYING A VEHICLE PRIVATELY

If you purchase a motor vehicle privately there is a far greater emphasis on you, the buyer, to consider your purchase as the Sale of Motor Vehicles Act does not apply.

There is no cooling-off period if you buy privately nor do you receive a warranty.

The ACT Office of Fair Trading is unable to help when there is a problem with a private car purchase.

Clear Title

Make sure there is no money owing on the vehicle. If there is, you risk having the vehicle repossessed by a previous owner's finance company.

You should:

  • ask the seller if there is any money owing on the vehicle;
  • ask the seller to show you the motor vehicle's registration papers;
  • note the registration number, engine number and vehicle identification (VIN) or chassis number;
  • telephone the Registrar of Encumbered Vehicles (REVS);
  • if REVS advises there is no encumbrance ask for a REVS Search Certificate;
  • if REVS advises there is an encumbrance on the vehicle be careful. You should not go ahead and buy the vehicle until you are satisfied with the arrangement for the owner to pay the debt.

Deposit

If you leave a deposit you should ensure both you and the seller agree about what this means. A deposit usually means that an agreement has been reached about the sale of the vehicle however, the sale may be subject to certain conditions. For example, you may like to record the agreed price and that the sale is 'subject to a REVS search and mechanical inspection satisfactory to the buyer'.

Determine in writing, before you leave a deposit, if the money is refundable if you do not proceed with the deal.

 

BUYING A VEHICLE AT AUCTION

It is important to take great care if you buy a vehicle at auction. You should take all the precautions you would when you purchase a vehicle privately.

If a vehicle purchased at auction has a problem you will only be able to seek redress if the auctioneer deliberately misrepresented the vehicle. If the vehicle sold at the auction was on behalf of a licensed dealer the purchase may be covered by the Act's warranty provisions.

 

CHECKLIST

The following checklist may help:

  • determine your needs;
  • determine your budget;
  • shop around for a vehicle that best meets your needs and budget;
  • check insurance costs and costs of spare parts;
  • do not sign anything until you have decided that the vehicle is definitely what you want and can afford;
  • ask specific questions about the vehicle's history and current condition;
  • ask the seller to put any promises in writing;
  • read all papers thoroughly before you sign them. Be sure you understand them and ask for clarification if you do not. Do not sign any blank or incomplete papers;
  • if you leave a deposit ensure it is subject to any conditions you require;
  • have a qualified motor mechanic inspect the vehicle and obtain a written report;
  • think very carefully before you sign a cooling off period waiver; and
  • get a receipt for any money you pay which identifies the business or, in the event of a private sale, the legal owner of the vehicle.

 

Frequently Asked Questions

1. Is there a cooling off period when I buy a car?

Yes. There is a cooling off period for motor vehicles purchased through a motor vehicle dealer. This cooling off period is 3 clear business days. For example, if you sign a contract to purchase a car on a Monday, your cooling off period would not start until the Tuesday and would end at the close of business on the Thursday. Be aware that the only day not considered a business day is Sunday and public holidays (check Saturdays). You must cancel the contract in writing within your 3 day period. You can waive your cooling off rights only by signing a waiver and taking immediate delivery of the car. Applying only one of these conditions does not void your rights to the cooling off period. If you do cancel within your cooling off period, the dealer is entitled to keep 1% of the purchase price of the vehicle or $100, whichever is the greater.

2. If I purchase a second hand car from a motor vehicle dealer, does it have a warranty?

Possibly. If the car you purchase has done less than 160,000km and is less than 10 years old at the time of purchase, you would have a 5000km or 3 month warranty, whichever occurs first.

3. What would be covered under my second hand car statutory warranty?

Everything is covered except tyres and batteries and perishable items such as brake pads, wiper blades etc; accessories fitted to the vehicle after manufacture such as some stereo systems; damage caused by accidents, misuse or negligence after you've taken delivery of the car; damage to paintwork and upholstery that was visible at the time of purchase, tune-ups and services and tools.