Purchasing a Car in Victoria
In Victorian the buying and selling of motor vehicles is covered by consumer law. The relevant legislation is the Australian Consumer Law and Fair Trading Act 2012, the Motor Car Traders Act 1986 and the Motor Car Traders Regulations 2018. There are several different ways of purchasing a car in Victoria and your rights as a consumer will be different depending on your method of purchase.
Purchasing a car in Victoria from a motor dealer
Motor dealers must comply with certain rules when doing business. If you purchase a car from a motor dealer, whether it is new or second hand, you are entitled to a cooling-off period of three business days after the purchase of a vehicle. Additionally, a motor dealer must provide you with the following when selling used cars:
- A guarantee of clear title, i.e. that the car is not stolen and there is no money owing on it under a finance arrangement; and
- A statutory warranty if the car is less than ten years old or has an odometer reading of less than 160,000km. This statutory warranty lasts for three months or 5000km, whichever occurs first; and
- A current roadworthy certificate;
Motor car dealers are required to display certain information on used cars about their condition. These are called forms of notice. They must list details such as whether the car will be covered by warranty and whether it is to be sold with current registration. A form must also be displayed on the car listing its defects (if it has any). These defects will then be excluded from any warranty under which the car is covered.
Buying a car at an auction
You may be able to purchase a motor vehicle at an auction for less than you would from a motor dealer. However, a car purchase at auction carries with it more risk. This is because you will not automatically be entitled to a statutory warranty on the vehicle if it is less than ten years old or has an odometer reading of less than 160,000km. Also, you will not automatically be entitled to a roadworthy certificate as vehicles can be sold without roadworthy certificates at auction. Additionally, you will not be entitled to a cooling-off period. However, the auction house does have the duty to ensure that the title on the vehicle is clear.
If you purchase a car at auction it is also important that you are aware that you may need to lodge a roadworthy certificate with VicRoads. Generally, this will be taken care of when you purchase a vehicle from a motor dealer.
Buying a car from a private seller
There is even more risk if you purchase a car from a private seller. You will not have any of the extra assurances you would have when purchasing from a motor dealer or an auctioneer. That is to say, you will not have the benefit of a cooling-off period or statutory warranty. You also will not be entitled to a roadworthy certificate or a guarantee of clear title. It is therefore important that you make your own inquiries about the vehicle before purchase. You can have a registered mechanic inspect the vehicle. You can also make inquiries on the internet about the status of the vehicle using the Personal Property Securities Register.
When purchasing from a private seller it is also important that you are aware that a vehicle transfer form and a roadworthy certificate must be lodged with VicRoads. Also, duty and transfer fees must also be paid to VicRoads. Generally, this will be taken care of when you purchase a vehicle from a motor dealer.
Purchasing a car in Victoria online
Both motor dealers and private sellers advertise online. If possible, it is best to physically view a motor vehicle before purchase. Also, check the Personal Properties Securities Register. There are online scams where fake vehicles are listed for sale for low prices. To find out more about these scams you can visit the ACCC’s scamwatch website. Also, be aware that if you purchase a car from a different state, different laws may apply to the purchase.
A rent-to-buy arrangement may seem an attractive option when purchasing a car as the monthly payments may be less than if you were to simply purchase the vehicle. However, there are certain things to be aware of when entering into such an agreement. The first is that the regular payments for the car do not go towards its purchase price. Generally, you will not become the owner of the car until you have made all payments under the agreement, pay a specified sum of money or pay market value for the car.
It is important that you make sure you understand all the contract terms associated with such an arrangement. In particular ensure you know:
- Who is responsible for the car’s running costs including registration and repairs during the rental period of the agreement;
- If the registration on the vehicle will be transferred to you when you purchase the car;
- If and on what basis you are allowed to end the contract; and
- What costs have to be paid at the conclusion of the arrangement.
It is also a good idea to consider the total price you are paying under the arrangement to determine whether you are getting value for money.
Sometimes an employer may offer you the option to sacrifice some of your salary for the opportunity to lease a car. Such a lease is a novated lease. Generally, this type of lease is for three years. At the end of this period, the lease ends, and the car is sold.
It is important to be aware that even though you do not own the car, you are still responsible for its running costs during the term of the lease. You will also be responsible for any infringement notices or fines issued in relation to the vehicle.
Using a motor car broker
You may decide to purchase a motor car through a motor car broker. If this is the case, you must determine if you will be entering into a contract for sale of the car with this broker or with another motor car dealer. The entity with whom you enter into a contract must be licensed. Otherwise, you will have no protection in law under the Motor Car Traders Act 1986. Also, be aware that motor car brokers may charge a fee or commission for their services.
If you require legal advice or representation in any legal matter, please contact Armstrong Legal.