Second hand motor vehicles

The purchase by consumers of second hand motor vehicles has traditionally been an area of frequent consumer complaint. The industry is regulated by the Second-hand Vehicles Dealers Act 1995 (SA), and any references in this section are to this Act.

No person may carry on a business of selling second hand motor vehicles unless she or he is licensed to do so [Second-hand Vechicles Dealers Act 1995 (SA) s 7]. The definition of what consitutes dealing in the Second-hand Vehicles Dealers Act 1995 (SA) has been expanded to catch “backyard” (unlicensed) traders. Under s 50 a person will be presumed to be a dealer if:

  • they have bought (or offered to buy), or sold (or offered to sell), at least 4 second hand vehicles during a 12 month period, or
  • they and a close associate have bought (or offered to buy), or sold (or offered to sell), at least 6 second hand vehicles during a period of 12 months.

Before granting a licence the Commissioner of Consumer Affairs must be satisfied that all the people concerned with the business are of good character and repute and are fit to sell or buy second hand motor vehicles [s 9]. The Commissioner must also be satisfied that the business has sufficient resources to meet the requirements of the Act. If an unlicensed person carries on the business of buying and selling second hand motor vehicles she or he commits an offence and can face a penalty up to $100 000 [s 7].

Display of Information

Dealers must give certain information to any potential buyers [Second-hand Vehicles Dealers Act 1995 (SA) s 16] and notices setting out the information must be attached to the vehicle. The information includes:

  • the name and address of the last owner of the vehicle in addition to the trade owner;
  • the reading on the odometer at the time that the vehicle was acquired from the owner referred to above;
  • the cash price of the vehicle;
  • the model (if any) and the year the vehicle was first registered;
  • such other particulars as may be prescribed under the Act [Second-hand Vehicles Dealers Act 1995 (SA) s 16].

This information must also be displayed at any auction where second hand vehicles are sold.

Warranties

If, upon delivery, there are defects in a vehicle (not a motor cycle) which make it unroadworthy or illegal, these defects must be made good regardless of the price paid for, or the distance travelled by, the vehicle [Second-hand Vehicles Dealers Act 1995 (SA) s 23(7)].

In many cases the consumer does not become aware of defects in the vehicle until after taking delivery and driving it. Difficulties may be experienced by consumers who attempt to have defects repaired by a dealer.

In addition to the pre-condition that a vehicle will be roadworthy when delivered there are warranties for certain vehicles. These warranties do not apply to motor cycles or to vehicles purchased at auction or immediately after an auction. There are also no warranties given to vehicles (not motor cycles) that were first registered more than fifteen years before the sale or that have been driven more than 200 000 kilometres.

These warranties [Second-hand Vehicles Dealers Act 1995 (SA) s 23] require that the dealer must repair or make good certain defects and vary depending on the price of the vehicle.

For vehicles:

  • under $3000 - no warranty, although vehicle must be roadworthy
  • $3001 - $6000 - 2 months or 3000 kms, whichever occurs first
  • over $6000 - 3 months or 5000 kms, whichever occurs first

In calculating the warranty period, the time that the vehicle is with the dealer for repairs does not count. The duty is to repair defects to accepted trade standards. This does not apply to defects in tyres or batteries or to reasonably apparent defects in upholstery or paintwork [ss 23(6),(7)]. A dealer does not have to repair any defects in a radio, cassette player, compact disc player, refrigerated air-conditioner, sunroof or any camping or recreational accessory if the dealer has exempted liability in the Section 16 Notice given to the purchaser.

It is possible for a consumer over 18 years of age to waive a warranty. Beforehand, the consumer must be given a Schedule 6 Notice that explains the consequences. The consumer's signature must be witnessed by a JP, solicitor or proclaimed bank manager who is independent of the dealer. The witness must make reasonable inquiries of the consumer to ensure that the consumer understands the effect of signing the form and if not, refer the consumer to Consumer and Business Services. It is an offence carrying a maximum fine of $8000 for a dealer to, in any other way, attempt to modify or exclude the rights under this Act. This includes letting the consumer believe that the vehicle is only for sale if the consumer waives the warranty rights [s 33].

A consumer who is still not satisfied after trying to resolve any problems with the dealer should refer the matter to the Consumer and Business Services for a conciliation conference. If this does not resolve the problem it may be necessary to apply for a Magistrates Court order.

Cooling off period

There is a two day cooling off period for purchasers of second hand motor vehicles who purchase from a dealer. During the cooling off period a purchaser may withdraw (rescind) from the contract of sale by written notice to the dealer.

A dealer cannot require a purchaser to make any payment before the cooling period expires other than a deposit of not more than 10% of the contract price. If the contract is cancelled by the purchaser within the cooling off period, the dealer must refund any deposit paid, less 2 % of the contract price or $100, whichever is the lesser. The refund must be paid by the end of the next business day and the dealer faces a penalty of up to $5000 (or $500 expiation fee) if they fail to comply.

During the cooling off period legal title for the vehicle remains with the dealer and they are entitled to keep physical possession also. However, they must allow the purchaser (or a person nominated by them) reasonable access to test drive or inspect the vehicle.

A purchaser can waive their right to a cooling off period but must sign a form indicating that they are aware of the implications of doing this. It is an offence for a dealer to influence or attempt to influence a purchaser to waiver his or her right to withdraw from the contract and a penalty of up to $20 000 applies [s 33(5a)]. In addition, they can be pursued for damages in the Magistrates Court by any individual who can show that they have suffered a loss or damage as a result of the offence.

Effect of cooling off period on credit contract

A credit contract will not take effect until after the expiration of the cooling off period or, in the event that the purchaser waives their right to withdraw, until a waiver has been signed.

If a purchaser withdraws from a sales contract within the cooling off period, any credit contract entered into in relation to the purchase will be void and any mortgage or other security taken by the credit provider will be discharged [s 18B(9)].

Private sales and the Personal Property Securities Register

Private sales (i.e. those conducted by a non-dealer) do not have the protections of the Second Hand Vehicle Dealers Act. There are no warranties for such sales and neither is there any cooling off period. In addition, any purchaser intending to make a private sale should check that the person selling the car is indeed the owner and entitled to sell the car and that there isn’t any money owing on the car. Where a person privately buys a second hand motor vehicle that is stolen or under finance, there is a risk that it may be repossessed by a finance company or seized by the police.

For vehicles subject to finance, a buyer can ensure she or he is protected by obtaining a certificate from the Personal Properties Securities Register (PPSR) for a small fee. The PPSR is a national register and is available on-line at www.ppsr.gov.au. A certificate can be printed at the same time. You will need to know the VIN of the vehicle to do the search as it is the only information that will identify the vehicle. Owner details are not required. The certificate also shows details regarding any reports regarding the stolen or written off history of the vehicle, assuming that information is reported. The search can be done by staff at PPSR if you cannot search on-line. If a certificate is obtained that shows there is no registered interest over the car, you will have until the end of the next day to complete the purchase to remain protected.

If you buy a car privately, you should always check the PPSR. If there is a registered security interest, you will lose the car if the lender repossesses it. Even if the seller says there is no security interest and no money owing, you should check for yourself on the PPSR.

You can contact the PPSR by phone on 1300 007 777 (1300 00PPSR).

Video resources

Following changes that were made to the law about second-hand vehicle dealing in 2010, Consumer and Business Services (formerly the Office of Consumer and Business Affairs) created these video resources:

Second hand motor vehicles  :  Last Revised: Mon May 7th 2012
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