Buying a car in the ACT: what you need to know

Buying a car is a big financial decision, so when you do make the decision, it’s essential to understand your legal rights. What if the purchase doesn’t turn out the way you hoped, or the car isn’t in good condition?

If something goes wrong after your purchase in the ACT, your options will depend on whether you bought the car through a dealer, at auction or from a private seller. Understanding these differences before you sign the contract can save you a lot of stress later. 

Buying a car through a motor dealer

When you buy a car through a licensed motor dealer in the Australian Capital Territory, you have the strongest level of legal protection. 

Dealers are required to comply with the Sale of Motor Vehicles Act 1977 (the Act), which includes strong safeguards for buyers. One of the most important of these is a clear title, but you also typically have recourse to the manufacturer’s warranties, statutory warranties if the car is used and consumer guarantees under Australian Consumer Law. 

Clear title guarantee

A dealer must guarantee clear title on the vehicles that they sell. This means that there’s no money owing on the vehicle, which is important because it means that no one else has any claim on it and it can’t be repossessed by a lender.

Manufacturer’s warranty

A new vehicle purchased from a motor dealer will almost always come with a manufacturer’s warranty. This will entitle you to have certain repairs done without charge within a certain time of purchasing the vehicle. In some situations, you may also be entitled to a new vehicle or even a full refund. 

The type of compensation you’re entitled to will depend on the significance of the defect. 

Statutory warranties

For used vehicles, statutory warranties also may apply. These typically cover cars that are:

• less than 10 years old, and 
• have travelled less than 160,000 kilometres. 

The statutory warranty period lasts for 5,000 kilometres or three months, whichever comes first. If the vehicle proves to be defective during this time period, the dealer must repair it and bring it back to a reasonable condition. When considering what is a ‘reasonable condition’, the age and the distance that the car has travelled can be taken into account. 

Certain items and types of damage are excluded from statutory warranties, so you should make sure you understand what is and is not covered by the warranty before buying a car.

Consumer guarantees

In addition to statutory and manufacturer’s warranties, buyers from licensed dealers are protected by consumer guarantees under the Australian Consumer Law. 

These guarantees require that the car:

• be of acceptable quality (safe, durable and free from defects)
• be fit for any purpose you described to the dealer
• match its description or any demonstration model. 

If there’s a major problem, then under consumer law, you may be entitled to choose a refund or replacement. Where the problem is not major, the dealer must still fix the issue within a reasonable time.

Cooling-off period

If you buy a car from a dealer, you’re also legally entitled to a cooling-off period after you sign the contract for purchase. In the ACT, you have three business days after signing the contract to change your mind. 

If you do change your mind and exercise your right to terminate the contract during this period, your deposit may not be fully refundable. Also, the dealer may be entitled to charge you fees or keep a percentage of the deposit. You should check the terms of the contract carefully before signing.

Buying a car at an auction

You may be able to obtain a bargain by purchasing a vehicle at an auction. But you should also be aware that you might not have the same protections when buying at auction as you would be if you bought a car from a dealer.

Clear title

Under Australian consumer law, even in an auction, you still have the right to clear title. 

Manufacturer’s warranty

If the car is near new (usually under five years old), then the balance of the manufacturer’s new car warranty may be transferred to you. 

Auctioneer’s obligations

The auctioneer does have obligations to you when you buy a car at auction. The first is a disclosure obligation. The auctioneer must say if the vehicle has or does not have a statutory warranty, or if it’s a repairable write-off. 

If an auctioneer is acting on behalf of a dealer, your car may be covered by a statutory warranty if it is less than 10 years old and has travelled less than 160,000 kilometres. In these circumstances, your consumer guarantee rights under the Australian Consumer Law may also apply in addition to any statutory warranty. 

If, however, the auctioneer is not acting on behalf of a licensed dealer and is simply facilitating a sale by a private owner, you may only be able to seek relief if you can show that the auctioneer or seller has deliberately misrepresented the vehicle.

Buying through a private seller

Buying a car privately often comes with the least protection. Generally, there’s:

• no statutory warranty
• no cooling-off period
• no consumer guarantees under consumer law

So, if you buy a car through a private seller and later find out it is defective, there will usually be little to no recourse to recover your losses unless the seller has been misleading or dishonest. 

This is why it is extremely important when purchasing a car privately that you do your due diligence and make proper inquiries about what you are purchasing. 

Checks to make before you buy a car privately

Before committing to buying a car privately, it’s a good idea to:

• have the car inspected by a mechanic 
• confirm its condition and roadworthiness
• check that there’s a clear title on the vehicle 

One of the best ways to make these checks is to complete a Personal Property Securities Register (PPSR) search. A PPSR search can tell you whether there’s finance owing on the vehicle, whether it’s been written off or whether it’s been reported stolen. 

It’s best to run this search right before you make a payment for the car, so you’re relying on the most up-to-date information.

Need advice before buying a car?

If you’re unsure about your rights when buying a car, or something has gone wrong after a purchase, it’s worth getting advice early. 

Your lawyer can help you understand where you stand and what options are available, so you can move forward with confidence. 

 Buying a car is a significant financial commitment, and working out your legal position after something goes wrong can be confusing. If you need advice on your rights or options, Armstrong Legal is here to help. Speak to a lawyer today.