A statutory warranty applies only to used vehicles bought from a licensed motor vehicle dealer.

The Motor Vehicle Dealers Act requires licensed dealers to fix certain defects in used motor vehicles they have sold.

The statutory warranty applies only to motor vehicles that have a purchase price of $4,000 or more and motor cycles that cost $3,500 or more, together with limits on age and the number of kilometres travelled at the time of sale.

The following table outlines the statutory warranty provisions:

Vehicles covered by statutory warranty

The following second-hand vehicles are covered by statutory warranty when bought from a dealer.

Passenger cars and derivatives, including:

• Off-road passenger four-wheel drives (two rows of seats)
• Station wagons and dual-cab utes (including four-wheel drives)
• Vans seating not more than eight (8) people
• Campervans (with cooking and sleeping facilities)

Passenger motor cycles:

• All passenger motor cycles.

See the list of vehicles which are not covered by statutory warranty.

What is not covered

A statutory warranty does not cover:

• routine services
• tune-ups
• batteries
• tyres (however, tyres must be roadworthy at the time of sale)
• accessories
• defects that arise from an accident or misuse of the vehicle.

Waiver

Warranties can be waived on:

• vehicles priced at $4000 or more
• motor cycles $3500 or more

A waiver must be agreed to by both the buyer and dealer and approved by the Commissioner for Consumer Protection.

A buyer can apply for the waiver of the warranty obligations before the vehicle is sold and the buyer takes possession.

If this is not done, then all warranty obligations will still apply to the vehicle.

An application for a waiver is likely to be approved if the:

• price of the vehicle is genuinely discounted to compensate for the loss of warranty rights;
• buyer accepts the mechanical report is thorough, fair and accurate and highlights all defects (the report does not have to be independent of the dealer, but the purchaser has the right to organise their own report);
• discount offered is substantially more than the likely cost of repairs for defects disclosed in the mechanical report and any covered by the warranty, to justify waiving the warranty;

A buyer’s rights under the Australian Consumer Law are not affected by the warranty waiver.

Contract to be conditional on warranty waiver

The contract to buy the vehicle should include the condition “Subject to the Commissioner for Consumer Protection approving a warranty waiver”.

If this statement is not on the contract, a dealer risks giving the buyer the right to buy the vehicle at the discounted price with the warranty if the application to waive is rejected or not made properly by the buyer.

If the application is rejected, any conditional offer would be void.

What does a statutory warranty cover

The image shows what is and is not covered under a used car statutory warranty. It is included in the car buyers checklist publication.

View a larger version of the User Car Warranty image