What are my rights when purchasing a used vehicle?

February 3, 2018
Posted by: admin

Purchasing a used vehicle represents great value and nothing beats the excitement of driving away in a swish new ride. However, sometimes issues can crop up after purchase that leave you with a sour taste in your mouth – before you start screaming “lemon!” from the mountaintops, it pays to do some research. Find out about your rights when purchasing a used vehicle.

What are my rights, yo?

In Victoria, the Motor Car Traders Act and the more general Australian Consumer Law (ACL) set out your rights when purchasing a used vehicle. Contrary to popular perception, this legislation exists to protect both the dealer and the consumer. Each party in a used vehicle transaction has rights and responsibilities.

Statutory Warranty

The Motor Car Traders Act contains a provision for statutory warranty. Statutory warranty covers vehicles that are less than 10 years old with an odometer reading of less than 160,000kms. Statutory warranty covers vehicles for three months or 5000kms after purchase (whichever occurs first).

What does statutory warranty mean? Basically a car dealer must repair faults and defects found during the warranty period to a reasonable condition, taking into account the vehicle’s age.

It’s important to understand what the clause “reasonable condition given the age of the vehicle” really means. To give an example – if a catalytic converter in a nine-year-old vehicle covered by statutory warranty required replacement, a dealer would not be required to replace it with a brand-new catalytic converter; they would be able to source a second-hand part that performed the required function.

Additionally, statutory warranty covers faults and/or defects; it does not provide a guarantee against normal wear and tear. It might cover you if your transmission goes kaput but it won’t cover you if your brake pads need replacing.

To utilise the statutory warranty provisions, you must contact the dealer as soon as you notice a fault or defect. If you continue to drive the vehicle or use the vehicle in a way that aggravates or worsens the fault or defect, then the dealer may no longer be responsible for rectifying it.

If you can’t drive the vehicle due to the fault, then the dealer is responsible for towing. If you can drive the vehicle safely, then you are responsible for returning the vehicle to the dealer. The dealer is not required to provide a loan car, but they may do if you’re nice to them.

What’s not covered by statutory warranty
  • motorcycles, commercial vehicles, or cars sold at public auction
  • accidental damage that occurs after the car has been delivered to the buyer
  • damage caused by the driver’s misuse or negligence after they take possession of the car
  • tyres, battery, or any accessories (e.g. radios, CD players, bluetooth functionality, clocks, light globes, GPS systems, non-standard body hardware, aerials, power outlets etc.)

Australian Consumer Law

Australian Consumer Law (ACL) sets out your rights when purchasing a used vehicle. ACL applies to the purchase of any product in Australia. Under ACL a consumer is entitled to a product that is of acceptable quality.

But what does “acceptable quality” mean in reality?

“Acceptable quality” does not mean “brand new.” When it comes to a used vehicle, acceptable quality is judged based on the:

  • Age of the vehicle
  • Odometer reading
  • Purchase price of the vehicle

Example: A 12-year-old vehicle that has travelled 200,000kms would not be expected to have the same functionality and quality of a brand new vehicle. With 12 years of use, it will have wear and tear, parts will probably require replacing sooner than in a new vehicle, some of the electrical components might not function as per new, and it will have different servicing and maintenance needs. This is not a reflection on the quality of the vehicle, but on the age of the vehicle.

Australian Consumer Law recognises that sometimes faults and defects don’t become apparent until after the sale. A dealer has a vehicle in stock for perhaps a couple of weeks and it spends most of its time sitting on a yard, sitting in a warehouse, or sitting on a hoist at a workshop. A dealer doesn’t use a stock vehicle like a consumer does.

After purchasing a used vehicle, you drive it home, to the shops, on a weekend adventure. Once you start using the vehicle on a daily basis, some potential issues might arise. If you believe that the dealer is responsible for the rectifying the issue, then you need to contact them as soon as possible. Make a phone call and request the email address where you can send your request in writing.

One big tip if you’re requesting assistance from a dealer – be polite. Even if the issue is not the dealer’s responsibility to rectify, they have an extensive network of suppliers and contractors who can probably have the work completed at a fraction of the cost that you will get quoted. But they won’t give you access to this network if you’re not nice to them.

Importantly, whilst you have rights when purchasing a used vehicle, under Australian Consumer Law you also have responsibilities.

The consumer must prevent the vehicle from becoming of unacceptable quality.

A vehicle does not fail to be of acceptable quality if a consumer causes it to become of unacceptable quality, fails to take reasonable steps to prevent the vehicle from becoming of unacceptable quality, or if the vehicle is damaged through abnormal use.

The consumer has a responsibility to assess acceptable quality when inspecting a vehicle.

A vehicle is not of unacceptable quality if the consumer examines the vehicle prior to agreeing to the sale and the examination ought to have revealed that the vehicle were not of acceptable quality.

This means that you are responsible for assessing quality prior to purchasing a used vehicle. A test drive is not just to check that a car can make it around the block – it’s to check that the vehicle will fulfil the requirements that you have of it. If full electrical functionality, crystal clear speakers, and icy cold air conditioning is a crucial requirement – then check them!

Cooling Off Period

After agreeing to purchase a vehicle, the purchaser has three clear business (excluding weekends and public holidays) to change their mind. However, if they choose to accept delivery of the vehicle during this three-day period, they automatically lose their right to cool off.

If a customer changes their mind within the three days, they must notify the dealer in writing. The dealer is entitled to keep $100 or 1% of the purchase amount, whichever is greater. After the three-day cooling off period has passed, the dealer is not obligated under current legislation to refund any money provided.

So what does all this mean in a nutshell?

You have certain rights when purchasing a used vehicle from a licensed dealer. Essentially a dealer is required to provide a safe vehicle of acceptable quality, taking into account the age, odometer reading, and purchase price of the vehicle.

However, you also have responsibilities as a consumer. If you inspect the vehicle prior to purchase, you are responsible for conducting your own assessment of acceptable quality. You are also required to take reasonable steps to prevent the vehicle from becoming of unacceptable quality after purchase.

In addition, some vehicles (if they are less than 10 years old and have travelled less than 160,000kms) are covered by statutory warranty for three months or up to 5000kms from the purchase date. During the statutory warranty period, a dealer is required to repair most (but not all) faults or defects to a reasonable condition given the age of the vehicle.

Finally, after agreeing to purchase a vehicle, you have three business days to “cool off” or change your mind, unless you choose take the car within those three days. However, you will still forfeit some money, even if you change your mind within the three days.

Bonus tip: don’t assume that an issue that crops up after purchasing a used vehicle means that the car is a lemon, or the dealer is dodgy, or the roadworthy is false (more on this in the next blog). Get in touch with the dealer, preferably in writing, and outline your concerns politely. Reputable dealers will want to help you, but not if you’re screaming at them over the phone.

The legalities around purchasing a used vehicle are often not as black and white as you might think. Often issues are resolved purely through negotiation because there is no clear cut legislation. In cases like this, remember to be nice! You’ll get much further.

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