Buying a Car in New South Wales
Buying a car is a significant financial decision. There are several ways of buying a car in New South Wales, all of which have pros and cons. The three main ways that people buy cars are through a car dealer, at an auction or through a private seller.
Buying a car through a motor dealer
This is perhaps the most common method for purchasing vehicles. Although it may be more expensive to purchase a motor vehicle from a dealer, rather than a private seller, there can be advantages. Motor dealers must hold a licence and conduct their business in accordance with the Motor Dealers and Repairers Act 2013. Among other things, this Act requires motor dealers to provide various disclosures to potential buyers.
If you are purchasing a new motor vehicle, the car will usually come with a warranty from the manufacturer. Motor dealers in some circumstances will also be required to provide warranties for second-hand vehicles. Motor dealers are also required to ensure than upon sale no finance is owed on a vehicle, i.e. that the vehicle has clear title.
You will also most likely have an opportunity to take a test drive of a vehicle if purchasing it from a motor dealer.
Buying a car at an auction
If you purchase a motor vehicle at an auction, you will possibly get a bargain. You won’t necessarily be entitled to a warranty or a consumer guarantee if the car is owned by someone other than the auctioneer. However, you will be entitled to a consumer guarantee if the vehicle is owned by the auctioneer. This means that the car should be safe and without fault, look acceptable and perform as expected. Otherwise, you may be entitled to a repair, refund or reimbursement for damages or loss. The auctioneer must also ensure that no money is owing on the vehicle, i.e. that there is a clear title on the vehicle. If a vehicle is sold at auction with number plates, the auctioneer must:
- to obtain an inspection report for the vehicle; or
- display a form advising that an inspection report has not been obtained.
You may not be able to take the car for a test drive although you may be able to arrange a private inspection of the vehicle at a time before the auction.
Buying a car through a private seller
If you purchase a vehicle through a private seller, you will not be entitled to an assurance that there is no finance owing on the car, i.e. that the car has a clear title. You also will not be entitled to any warranties. For these reasons, it is particularly important to take care when purchasing a vehicle privately. You may wish to have your own mechanic inspect the car before you purchase it.
It is advisable when purchasing a car in New South Wales privately to do a registration check online or a rego check. This can provide peace of mind that the car you are purchasing is registered legally, insured and roadworthy.
After buying a car in New South Wales
After you have purchased a vehicle, you need to ensure you do the following.
Register the change in ownership
You must register the change in ownership of the car after you have purchased it. The Roads and Maritime Services division of the Department of Transport for New South Wales manages registration. You will have fourteen days after you purchase a vehicle in which to transfer ownership into your name. Otherwise, you may be charged a late fee. The registration on the vehicle can be cancelled if you fail to transfer the registration.
Pay stamp duty
When you buy a car in New South Wales, you may be required to pay stamp duty. Usually, you can do this at the time when you transfer the vehicle into your name. The market value or the purchase price, whichever is higher, is used to calculate the stamp duty cost. This calculator may assist you in determining what stamp duty you owe.
Compulsory third party insurance or green slip
There is a minimum level of insurance that you must hold when you own a motor vehicle. This is known as compulsory third party insurance or a green slip. You can purchase this insurance directly from insurance companies. The regulator of insurance in New South Wales, the State Insurance Regulatory Authority, may be able to provide you with advice on where to find the cheapest compulsory third party insurance or green slip.
There are different types of loans you can enter into for the purchase of a vehicle if you cannot pay for it outright. These included fixed-rate loans, where the rate of interest remains the same throughout the term of the loan, and variable-rate loans, where the rate of interest varies according to market interest rates. The amount you will pay over the length of the loan will depend on the amount of deposit you pay at the beginning of the loan term and the amount of the repayments you make periodically. There are different types of loan arrangements that you may be offered when buying a car. One of these is a balloon repayment option. This is an arrangement where smaller monthly repayments are offered, but a large repayment is required at the end of the loan term. Make sure you understand all the terms of a finance agreement for the purchase of a car before you enter into it.
Cooling off period
If you buy a car from a motor dealer and the motor dealer arranges finance for you, or provides you with a referral, or an application for a credit provider, a cooling-off period will apply. Generally, this cooling-off period will begin when the finance agreement is entered into, until 5pm on the following day. You can cancel your finance agreement by giving signed written notice to the dealer within the cooling-off period. You will be required to pay the dealer $250, or 2% of the purchase price, whichever is the lesser amount. If you organise your own finance a cooling-off period may also apply. Be sure to check the terms of your agreement before signing.
If you require legal advice or representation in any legal matter, please contact Armstrong Legal.