Pre-estimated liquidated damages (PELD)
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.