9 out of 10 used cars have a defect. Don't risk buying a lemon!
There are a number of places you can buy a car, and shopping around is likely to save you money.
How you choose between them will depend on your priorities. If you’re on a budget, a private sale could be the best option. But if a warranty and guarantee of title are more important, it will be better to purchase through a licensed dealer.
Private sales
Private sales make up a large proportion of annual used car sales. In addition to the local paper or trading post, the growth of the internet has meant increasing number of websites now advertise and sell cars.
The internet can be a great place to start your search, as you can view many vehicles online at any time without being pressured into buying.
But while this may remove the hassle of trudging around car yards, private sales are high risk as they are less regulated and there is no comeback if a car is found to be stolen or have significant mechanical problems. It may be cheaper to buy privately, but you have limited protection under the law.
But those in the market for older and cheaper cars are likely to purchase privately, as there are few dealers that operate in this segment.
If you decide not to buy from a licensed dealer, make sure you take the following important precautions.
Advice on Buying a Used Car Privately
From the Queensland Government Department of Employment, Economic Development and Innovation
When you buy privately, make sure*:
- The registered owner’s name, the registration number plate, the vehicle identification number (VIN) (or chassis number if car was made before 1989), the engine number and any other details correspond exactly with the information on the registration certificate
- The seller is the registered owner by comparing the current registration certificate with the seller’s driver’s licence
- The car is not stolen by contacting your local police station and giving them the VIN number, registration number and engine number
- The car (if registered) has a current safety certificate
- You get a PPSR certificate which will show if there is any money owing on the vehicle and also the written-off and stolen status
- The car is mechanically sound by getting an independent inspection from a qualified person.
Note: These steps will offer no protection if the vehicle’s identifiers have been altered. Altering identifiers (engine number, VIN, registration number) is a commonly practiced part of re-identifying a stolen vehicle.
No foolproof method exists to determine if a vehicle is stolen. Even police forensic investigators can have trouble determining a vehicle’s true identity.
Before buying a used car privately, it is a good idea to arrange an RACQ Vehicle Inspection - visit racq.com/vehicleinspections or call 13 1905.
Internet sales
The internet is increasingly being used to advertise and sell used cars, with a wide range of sites available to both private and commercial sellers. It can give you access to cars anywhere in Australia, or for that matter, the world.
Most car sales web sites act as a marketplace bringing buyers and sellers together, with transactions completed offline directly between buyer and seller.
If you source your used car through one of the many online car markets (where private sellers advertise their cars for sale for a fee), you are essentially exposed to the same risks as buying privately. As such, you should take the same precautions as recommended above in our Buying Privately section.
However, if buying a vehicle from another state, it may not be possible, or easy, to conduct the necessary searches. Never buy sight unseen via the internet and never transfer money without actually checking that the vehicle exists.
Warranty cover could be compromised or difficult to maintain if you need to return the vehicle to a particular (interstate or not local) dealer for servicing and repairs. If you buy a vehicle from interstate, it will need to be reregistered in Queensland, which will add to the costs.
Dealer regulations vary from state to state so you will need to determine how things such as warranties and clear title are covered where you buy your car.
Most visited Australian car sales websites 2010
Car dealerships
While buying through a licensed dealer may be more expensive than buying privately, you have greater protection because Queensland dealers are required to be licensed and operate under the regulations of the Property Agents and Motor Dealers Act.
Under the Act, you are entitled to:
- A one day cooling-off period
- A Statutory Warranty (under certain circumstances – see below)
- A guarantee of clear title.
Cooling-off period
Motor dealers are required to give you a one day cooling-off period. During this period you have the right to take the car for an independent mechanical inspection and for a test drive. If you take the car away for any other reason, the cooling-off period does not apply.
If you choose not to buy the car for any reason, you must put this in writing to the dealer before the cooling-off period ends. If you change your mind and decide that you don’t want to buy the car, the dealer is entitled to keep up to $100 of the deposit you paid. The cooling-off period does not apply to vehicles sold on consignment for a private seller.
Statutory warranty
Used cars sold in Queensland by licensed motor dealers are covered by a statutory warranty which guarantees the warrantor will repair, free of charge, certain defects that are discovered after the vehicle has been sold (provided the defects are notified in writing 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.
Guarantee of clear title
When you buy a car from a licensed motor dealer they are required to provide you with written notice of clear title. This protects you if a previous owner still owes money on it or if the vehicle turns out to be stolen.
Deposits, contracts and paper work
If you buy a used car from a motor dealer you will have to sign a legally binding contract of sale. Like any contract, you should read and understand it before you sign. If there is anything you don’t understand, seek legal advice. Never sign an incomplete contract.
Before you sign a contract make sure you receive and read:
- A notice giving details of the vehicle
- Details of the cooling-off period (i.e, the date and time it starts and ends)
- Details on the proportion of your deposit deemed non-refundable (maximum $100)
- Details on how to get out of the contract during the cooling-off period
- Confirmation the dealer will return any trade-in that was part of the deal if you decide not to buy the car
- A notice detailing the statutory warranty period
- A notice of guarantee of title, which includes the odometer reading
- A PPSR certificate stating clear title and disclosing any water damage that has been recorded on the register
- A current safety certificate
- If applicable, a copy of an acknowledgement signed by you confirming you are aware the car has been water damaged.
If there are repairs the dealer has promised to carry out before the sale or as a result of the mechanical inspection, get this in writing and check that they have been done before taking delivery. If the dealer is unwilling to allow you to add clauses to the contract, don’t buy the car.
When you sign the contract you will be expected to pay a deposit. Pay the minimum amount the dealer will accept and get a receipt. This amount should be deducted from the total price and be refundable (less a non-refundable amount) if you cancel the contract during the cooling-off period.
Problems
If you experience problems with a car purchased through a dealer and it needs repairs, follow the instructions set out in the statutory warranty notice you were given when you bought the car.
If you are unable to reach a satisfactory resolution with the dealer you should contact the Office of Fair Trading, RACQ or the Motor Trades Association Queensland (MTA-Q) for further advice.
As a last resort, you can apply to have the matter heard by the Queensland Civil and Administrative Tribunal if the amount in question is less than $7,500.
If the problem relates to other matters you should first try to resolve the problem with the dealer. This should be in writing, setting out the details of your complaint, what you require to resolve it, and giving a reasonable deadline for action.
Keep copies of all correspondence and keep notes about your dealings, particularly about who you spoke to, when you spoke to them and the information they provided. If you are unable to resolve the matter to your satisfaction contact the Office of Fair Trading for further advice.
Brokers and wholesalers
Brokers act for buyers to locate used cars that meet their specifications, while wholesalers offer an alternative purchasing channel to used car dealerships. Brokers and wholesalers can reduce the legwork required to find a car that's right for you.
Brokers
Brokers locate used cars of the particular make and model specified by the buyer, usually through a network of licensed motor dealers. The advantage for the buyer is that the broker does the time consuming 'legwork' of finding the appropriate used cars.
Brokers then charge a commission on the sale of each used car. The commission may be charged up front or it may be built into the price of the car. However the commission is charged, you should find out how much it is before engaging a broker, as ultimately the buyer pays.
Brokers, like motor dealers, are required to be licensed and operate under the Property Agents and Motor Dealers Act. Where a broker sources a vehicle from a dealer, it is the dealer who guarantees clear title and provides the statutory warranty.
Wholesalers
Buying from a wholesaler does not necessarily mean you will pay wholesale price for a car. You could pay the same price from a wholesaler as you would from a used car dealership.
When buying from a wholesaler you have the same rights and obligations, and you should take the same precautions as if you were buying through a normal used car dealership.
Auctions
Buying a used car at auction may be cheaper than from a dealer; however, it also carries greater risks.
When you buy a used car at auction, there:
- May be no statutory warranty cover
- Will be no cooling-off period
- Is usually no opportunity to test drive the vehicle
- Is limited opportunity to inspect the car (generally what you can see as you walk around and sit in it).
Some auction houses provide buyers with a 'condition report' for the vehicles they sell, but unless otherwise indicated, these reports are not the result of a full mechanical inspection and the car may have significant defects that are not mentioned.
Auctioneers are bound by many of the same requirements as motor dealers. For instance, they are required to guarantee clear title to vehicles they sell and to provide a REVS certificate. But unregistered vehicles will not necessarily have a safety certificate.
Buying at auctions is not for everyone. If you don’t know a lot about cars, take someone with you who does. Ultimately you have to satisfy yourself that the vehicle is in good condition because once you’ve bought it, it’s yours faults and all.
If you are planning on buying at auction it’s a good idea to attend a few first to get the feel of how they work. Listen carefully to what the auctioneer says, as you will often be given important information about the vehicle and the conditions of the sale.
Research the car you want and have a good idea about what you can afford and what's a fair price for the model you want (taking into account any extra equipment fitted and kilometres travelled). Don’t get caught up in the moment and bid over your pre-determined price.
The price you pay should be significantly less than what a dealer would want for the car in a retail sale. Don’t forget to factor into the price a 'risk component' to cover the cost of any unforeseen problems the car may have.
Before bidding, check with the auctioneer if there is a buyer premium (a percentage of the sale price often around 10%) added to the successful bid.
Damaged vehicle auctions
Vehicles that have been damaged and written-off by insurance companies are usually disposed of at auction. These vehicles fall into two categories:
- Statutory Write-offs are deemed to be too severely damaged to be effectively repaired and can never be re-registered (and so may be sold for spare parts or scrap metal)
- Repairable Write-offs can only be re-registered after they have passed a Written Off Vehicle Inspection (WOVI).
Both classes of vehicle are listed on the Written Off Vehicle Register (WOVR), however, Repairable Write-Offs are removed from the register once they have been cleared by a WOVI.
Some people believe that buying and repairing a wrecked vehicle is a cheap way of buying a car. The reality is, unless you have the skills and equipment to repair these vehicles properly, it is unlikely to result in a satisfactory or cost effective outcome.
A vehicle is written-off because the cost of doing the repairs properly has neared or exceeded the vehicle’s value. If they could be repaired satisfactorily and cost effectively, they would still be on the road.
If you think this information doesn’t apply to you because you’d never consider buying a damaged vehicle, think again. Repaired written-off vehicles inevitably end up on the used car market, where they’re offered to people like you. That’s another reason why an independent vehicle inspection is a must.
Build dates
Be cautious of vehicles advertised as 'First registered' as this could indicate that it is actually an earlier model. A PPSR certificate will give you the year of manufacture.
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