Commissioner's blog: Navigate buying a used-car
Changes to pre-estimated liquidated damages
From 1 January 2022, the maximum amount of pre-estimated liquidated damages that a dealer may charge is five per cent.
It may be harder for used-car buyers to find a bargain these days, with prices on the rise as a result of a shortage of new vehicles driven by a range of factors. Many of these factors are associated with the COVID-19 coronavirus pandemic, including interruptions to supply chains and a world-wide shortage of micro-chips.
This means it’s a particularly important time for those on the hunt for a second-hand vehicle to do their homework and be across their rights before making a purchase.
Some consumers may not realise that private sales aren’t covered by consumer laws, meaning there is no warranty and you will find it almost impossible to return the car if it turns out to be faulty.
While dealerships must provide a warranty on used vehicles if they are less than 12 years old, have not travelled more than 180,000 kilometres and the price is more than $4,000, there is no cooling-off period once a contract is signed. This means that the buyer could be liable to pay up to 15 per cent of the purchase price, known as ‘pre-estimated liquidated damages’ for changing their mind about going through with the deal after having signed the sale contract.
Some key advice we offer to all used-car buyers is to have the vehicle independently inspected by a competent licensed mechanic at their own expense to identify any roadworthy issues and to potentially use the results as leverage when negotiating the deal.
It is equally important to review the Properties Securities Register at www.ppsr.gov.au before purchase to see whether the car has been previously written off or has money owing on it.
Check the vehicle licence and its expiry date, plus make sure the vehicle identification number (VIN), number plate, engine number, year of manufacture and the owner details match the licence papers. Also ask to see the stamped log-book to verify any claims of a ‘full service history’.
And be aware that fake advertisements can appear on genuine car sales websites, in online classifieds and online auction sites. These scams offer non-existent second-hand vehicles for lower than expected prices.
Commissioner for Consumer Protection
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