9 out of 10 used cars have a defect. Don't risk buying a lemon!
Being aware of the legal obligations of motor dealers and private sellers when selling a car will help protect you as a buyer.
New car purchases
If you buy a new car, ensure you:
- check the contract, total cost and warranty conditions
- be aware that there is no cooling-off period
- check the dates on the compliance and build plates
- negotiate the best deal that suits you
- pay a deposit
- conduct a pre-delivery check
- understand the trader’s policy for resolving disputes.
The contract of sale for the purchase of a motor vehicle is a legally binding document. Do not sign it until you are absolutely sure you want to buy the car and can afford to do so.
Make sure there are no unfavourable clauses in the contract and that it specifies a trade-in amount and a delivery date.
Add any specific requirements you may have, such as:
- "This contract is subject to the purchaser obtaining sufficient finance from (insert the name of your credit provider) to complete the purchase by (insert date)"
- "(Insert car details including make, model, colour and build date) is to be delivered by (insert date) otherwise the contract will be cancelled and deposit refunded".
You should never sign an incomplete contract, and always keep a copy of what you sign.
The dealer must specify all mandatory costs you pay when purchasing a vehicle.
This should include the sum of:
- the actual price of the vehicle
- dealer delivery charges
- any other levies or fees that must be paid before receiving the vehicle.
Make sure you are aware of the full cost of the vehicle, including any add-ons such as window tinting and rust proofing.
When you buy a new car, there is no cooling-off period. Make sure you are completely satisfied with the car and the terms of the contract before signing a contract and paying any deposit.
A vehicle is considered a new car if it has never been registered. A registered demonstration car is deemed to be a used vehicle, so a cooling off period applies.
Vehicle plate checks
Check the build plate for the car’s construction date. The compliance plate shows the date the car met certain Australian safety standards, making it legal to drive.
The compliance date will not necessarily be the same as the build date, especially on imported vehicles. Make sure the advertised year and model of the car matches its true age.
The build plate date is commonly used to value a car when you resell it. If you have bought a car based on its compliance date, rather than build date, its resale value could be significantly less than expected.
Do your own pre-delivery check on the vehicle. Check that:
- the paintwork has no chips and the body panels are not dented
- the interior has no cuts or scratches
- all accessories or extras you ordered are included
- the date listed on the contract for the build plate, i.e. the year the car was actually built, is correct and corresponds with the date listed on the build plate on the car. This is particularly important if you have specified a particular build date in the purchase contract.
- the date listed on the contract for the compliance date, i.e. the date the car complied with Australian Safety Standards is correct and corresponds with the date listed on the compliance plate on the car.
Used car purchases
Buying a used car from a dealer
All motor dealers selling used cars in Queensland must be licensed. Motor dealers must disclose to all intending purchasers that they are licensed and, when selling a used vehicle, they must provide information as to the cooling-off period and whether the vehicle comes with a statutory warranty.
When you buy a used car from a licensed dealer, you are entitled to:
- a one business day cooling-off period
- a statutory warranty (under normal circumstances)
- a guarantee of clear title on the vehicle
- protection by the motor dealer's code of conduct
- access to a claim fund that may compensate you if you have suffered a financial loss because of the motor dealer's actions.
The Property Agents and Motor Dealers Act 2000
The Property Agents and Motor Dealers Act 2000 clearly outlines nine steps a motor dealer must take to sell a used motor vehicle.
The motor dealer must complete these forms before entering into any contract of sale:
- PAMD Form 37a - Important pre-purchase information cooling-off period (PDF, 220 KB)
- PAMD Form 38a-1 - Notice of statutory warranty (PDF, 198 KB)
- PAMD Form 38a-2 - Statutory warranty period (PDF, 186 KB).
Step 1 must be done before any contract of sale is entered into. If a deposit is paid, a receipt that identifies the vehicle being bought must be issued immediately.
- The motor dealer must complete a contract for sale (purchase contract) in writing. Each person noted as a buyer must receive a copy.
- The motor dealer must provide a dealer statement to the buyer, which records all details of the vehicle you are buying.
- The motor dealer must obtain a dealer statement from the seller (section 331 of Property Agents and Motor dealers Act 2000, Regulation 24) when purchasing a vehicle or accepting a trade-in.
- The motor dealer must give the buyer a receipt for money paid. In a consignment transaction, this needs to be on a trust account receipt.
- The motor dealer must complete PAMD Form 63 - Guarantee of title by a motor dealer (PDF, 185 KB), which guarantees title and identifies the person responsible for guaranteeing title. The motor dealer must give the form to the buyer when they take ownership of the vehicle.
- The buyer must sign declarations and acknowledgements (PAMD Form 63 - Guarantee of title by a motor dealer). This acknowledges that the buyer received the guarantee of title and a Personal Property Security Register (PPSR) certificate. This must happen when the customer buys the vehicle.
- The motor dealer must give to the buyer a PAMD Form 37 a – Important pre-purchase information on the cooling-off period, which states when the cooling off period begins and ends. In order for the buyer to exit the contract during the ‘one business day cooling-off period’, they must notify the dealer in writing during the cooling-off period and not take delivery of the vehicle. The dealer is entitled to keep $100 of the deposit paid by the buyer. The cooling-off period does not apply to vehicles sold on consignment for a private seller. The buyer may take the vehicle only for a vehicle inspection or test drive without affecting their cooling-off rights. When the cooling-off period ends, the customer takes delivery of the vehicle.
The motor dealer must tell the buyer and also ask the buyer to sign an acknowledgement if the motor vehicle:
- is unregistered and was on the Written Off Vehicle Register. However, if the motor vehicle is registered, the motor dealer does not have to tell the buyer that it was once on the Written Off Vehicle Register
- is a statutory write-off and can not be registered for road use
- has been damaged. This includes registered or unregistered vehicles.
The Department of Transport and Main Roads regulation specifies that a vehicle offered for sale must clearly display a current safety certificate. For more information on safety certificates, please contact the Department of Transport and Main Roads.
Used cars sold in Queensland by licensed motor dealers are covered by a statutory warranty, which guarantees the dealer will repair, free of charge, certain defects that are discovered after the vehicle has been sold (provided the defects are notified in writing to the dealer within the Statutory Warranty period and the car is delivered back to the dealer or the dealer’s nominated repairer).
The dealer must provide you with details of the warranty when you purchase any vehicle that is covered by a statutory warranty. The statutory warranty does not apply to commercial vehicles, vehicles sold for wrecking, motorcycles, caravans or vehicles sold on consignment for a private seller.
Buying a used car privately
If you decide not to buy a car from a licensed dealer, take extra precautions.
Remember that if you buy privately:
- you are not entitled to the protection of the cooling-off period that applies to used vehicles purchased from a licensed motor dealer
- you will have no way of ensuring the vehicle is not stolen
- you will not get a statutory warranty
- the seller is not obliged to give you a PPSR certificate
- the seller is not bound by the same laws and Code of Conduct as applicable in Queensland to licensed motor vehicle dealers
- you cannot access the compensation claim fund if anything goes wrong.
When you buy privately, make sure:
- the registration number plate, the vehicle identification number (VIN), or chassis number if the car was made before 1989, the engine number and any other details correspond exactly with the information on the registration certificate. Be aware that vehicle registration is not proof of ownership of a vehicle. The person listed on the vehicle registration records as being the registered user of the vehicle may not necessarily be the owner of the vehicle. If the person selling you the car is not the owner of the vehicle, try and obtain in writing from the owner that the car is being sold with their knowledge and consent, and that they authorise the person you are dealing with to sell the car on their behalf.
- the seller is the registered owner by comparing the current registration certificate with the seller’s driver’s licence
- the car (if registered) has a current safety certificate on display on the car at the time it is up for sale.
- you get a PPSR certificate to make sure there is no money owing on the vehicle and its written off and stolen status.
- the car is mechanically sound by getting an independent inspection from a qualified person. You can obtain a vehicle inspection report from the RACQ Vehicle Inspection Service. For more information, contact RACQ on 13 1905