From 1 January 2022, the maximum amount of pre-estimated liquidated damages (PELD) that a motor vehicle dealer may charge is five per cent.

Dealers should not be asking for this amount as a default position. 

The cancellation cost has to be a genuine and reasonable assessment of likely losses as a result of the deal not proceeding.

A consumer is entitled to receive their full deposit back and should not be charged any pre-estimated liquidated damages if:

• The contract is broken because the dealer has breached their obligations.
• The consumer withdrew their offer before the dealer accepted.
• The consumer cannot meet their contractual obligations despite taking all reasonable steps to do so.

Need to know more about PELD and contracts? Go to our page Vehicle sales contracts.