Buying a motor vehicle
Contributed by CathyHe and SandraOtto, as amended by MichaelBarritt and current to October 2024 Buying a motor vehicle is a major financial commitment and can be problematic, especially if your knowledge of vehicles is limited or your understanding of your consumer rights is poor. A person who is considering buying a motor vehicle should be aware of their rights and obligations under the contract of sale and their general consumer rights and guarantees. Several separate areas of law govern the purchase of motor vehicles. A list of these Acts and their abbreviations is at the beginning of this chapter (see Contracts and consumer protection ). When buying privately or at auction, a purchaser has less legislative protection than buying from a licensed motor vehicle dealer. A purchaser can check the ownership and title of the vehicle[HW1] , but extra care and attention needs to be exercised. Motor vehicle dealers are subject to more regulation, including:- The provisions of the Australian Consumer Law located under schedule 2 of the Competition and Consumer Act 2010(Cth) (ACL), and
- The Consumer Affairs and Fair Trading Act 1990 (NT) (CAFTA). Part 10 of CAFTA concentrates exclusively on motor vehicle dealers.
Buying a used motor vehicle privately
Before buying a used registered vehicle from a person or organisation other than a motor vehicle dealer, a purchaser should check:- for mechanical defects
- whether the vehicle is stolen
- whether any money is owing on it
Checking ownership
The certificate of registration issued by the MVR details the owner's name and address, a brief description of the car, together with its registration number, vehicle identification number (VIN), engine number, and the date until which the vehicle is registered. Where the vehicle is purchased from someone other than a licensed motor vehicle dealer, the purchaser should check that the vendor (seller) is the registered owner or has the owner's authority to sell the car. It is always a good idea to sight some identification of the person you are dealing with, and take a photo of that document if they allow it. If you accidently purchase a stolen vehicle, it is likely that you must return the vehicle to its rightful owner, and you may have problems recovering the money you paid for the car.Money owing?
Aside from verifying the vehicle's ownership, a prospective purchaser should find out whether the vehicle acts as a security for money being owed to a creditor, such as a loan, hire purchase agreement or lease. If that is the case, the title to the goods is said to be encumbered and the vehicle can't legitimately be sold until this issue has been resolved. The Personal Property Securities Register (PPSR) is a national online register which holds details about security interests in personal property, including vehicles. A prospective buyer can search the PPSR to find out if anyone, apart from the vendor, has a claim to a vehicle (see Contact points ). Any claim must be satisfied before a buyer can obtain a clear title to the vehicle. A buyer can check if a vehicle is encumbered by conducting a Motor Vehicle Search online at www.ppsr.gov.au. A small fee applies. The search requires a person to answer a question about when the vehicle was manufactured and enter the VIN/chassis number. The person can then receive a search certificate via email. Check Carsales if you are unsure of how to find a VIN: https://www.carsales.com.au/editorial/details/how-do-i-find-my-vin-122138/ The search certificate also contains information about whether the vehicle has been reported stolen or has ever been written off in an insurance claim. However, it should be noted that the accuracy of the Register is only as good as the information supplied to it. It can only supply information about thefts that have been reported to police and write-offs that have been reported to the insurer.Transferring ownership
After a sale, the buyer is required to complete an Application to Transfer. The vendor completes the Notice of Disposal. These forms transfer liability for any future traffic fines or offences. Both can be completed on the reverse side of the Certificate of Registration and can also be obtained from the MVR. A small vehicle transfer of ownership fee and stamp duty of 3% of the vehicle's purchase price are payable. A purchaser must transfer registration within 14 days from the date of sale. If the registration is not transferred, agencies such as Northern Territory Consumer Affairs (NTCA) may not be able to assist in the event of a warranty problem.Buying from a dealer
Buying a used motor vehicle from a dealer
Part 10 of the CAFTA regulates the activities of motor vehicle dealers. A dealer is defined as a person who buys, sells and exchanges motor vehicles as a business. This definition also covers trade-ins. A person who sells four or more motor vehicles in a period of 12 months is presumed to be in the business of selling motor vehicles and must be a licenced dealer. Financiers and people in business who buy motor vehicles solely for demolishing and dismantling ('wreckers') are not considered to be dealers. A dealer is required to sell a vehicle in a condition fit for registration [CAFTA s165], unless both parties exclude this requirement in the contract by using a particular contract form which contains a warning that must be read out to the consumer by an officer who is authorised by the Commissioner of Consumer Affairs, or a member of the Police Force. Dealers hold copies of this form. A dealer must not sell or offer for sale a motor vehicle if it is registered outside of the Northern Territory. Interstate number plates can be a red flag. A dealer must be licensed and operate from a premises specified in their licence. Licences are available from Licensing NT within the Department of Industry, Tourism and Trade. A dealer has to display their name, place of business and licence number at their place of business. This information must also be contained in any advertisement. A dealer must also maintain a register of their dealings in motor vehicles. The register must contain information about every vehicle bought and sold, including registration, VIN, engine number, odometer reading and on which date and from whom the vehicle was acquired. A dealer is required to use a standard form when buying or selling a vehicle, and they must provide certain after sales warranty services. The ACL also prohibits false or misleading statements and deceptive conduct, and provides guarantees with respect to goods sold (see Contracts and consumer protection, this chapter 7.1). NTCA is precluded from giving legal advice, but can provide some information regarding standard contracts and how to enforce warranties (see Contact points).Contract of sale
A dealer must use a standard written contract when selling a used car [CAFTA s160]. All licensed motor vehicle forms can be found here: https://nt.gov.au/industry/licences/motor-vehicle-dealer-licences/licensed-motor-vehicle-dealer-forms The contract of sale has to include all material particulars, with all irrelevant information deleted, before it can be given to the purchaser to sign. A buyer who is unsure about the document being used by a dealer should take it to Licensing NT within the Department of Industry, Tourism and Trade and have it checked. Remember, a contract is a legally binding document and once signed, constitutes an agreement to purchase the vehicle. If a change of mind occurs, any deposit paid may be lost. Unlike in some other Australian jurisdictions, in the Territory there is no cooling-off period when signing a contract to buy a car. All documents relating to the purchase should be read and understood completely before they are signed. A buyer can ask to take documents home for a day or two, so that points can be clarified and questions discussed with a trusted third party. A car dealer should always allow this. This is particularly important if the buyer does not have English as their first language. Once you sign the purchase paperwork, you are legally bound by the contract. There is no cooling-off period when purchasing vehicles in the Territory. A dealer who uses or tries to use a non-standard contract to sell a vehicle is guilty of an offence, and significant pecuniary penalties may apply. Such an incident should be reported to Licensing NT within the Department of Industry, Tourism and Trade, or to NTCA. Where incorrect paperwork was used by the dealer, the purchaser can rescind (cancel) such a contract within three months of signing it by giving a written notice to the dealer. The dealer has to refund any payment and return any trade-in given by the purchaser under the contract. Similarly, the purchaser must return the vehicle to the dealer. If the value of the vehicle or a trade-in has depreciated due to a lack of reasonable care by either party, the party at fault must compensate the other for the difference.Buying a new motor vehicle from a dealer
An order form for a new vehicle is a legally binding contract, so do not sign it before you are ready. Remember: There is no 'cooling-off' period for vehicle sales in the Territory. Make sure you understand all the terms and conditions before signing. You can delete any sections from the order form that you don't agree with. Don't sign any form or contract with blank spaces and strike through sections that are blank or that do not apply to your purchase. Be sure to confirm the delivery date.Warranties
Both for new and used cars that are purchased from a dealer, consumer guarantees under the Australian Consumer Law (ACL) apply in addition to any other warranty from the manufacturer or the dealer. Depending on the price you paid for the vehicle, it may be expected to last a lot longer than the statutory warranty period for used cars, or manufacturer warranties for new cars. Under the ACL, multiple minor failures can amount to a major failure. Minor faults with a product usually mean that the dealer can decide how to rectify the issue. However, a vehicle that is repeatedly breaking down and has multiple minor faults, is now considered to be a major failure. With a major failure, the consumer can choose between a replacement or full refund.Used car warranties
The CAFTA provides for statutory warranties that apply to used cars purchased from licensed motor vehicle dealers [Part 10 ss168-173]. However, it is also important to remember that guarantees implied by the ACL also apply.Statutory warranties under CAFTA
Statutory warranties are a dealer's obligation to repair certain defects in the car (for example, the radiator breaks down within the warranty period due to a mechanical fault) including any defects that existed or potentially existed at the time of the sale, subject to some exclusions. The dealer is liable to repair the defect and must offer the vehicle in a reasonable condition given its age and the distance it has travelled. Statutory warranties under CAFTA only apply if the defect appeared or occurred before the vehicle had been driven 5,000 km (motorcycles cannot be more than five years old) after being sold or within three months from the date the buyer took possession, whichever is earlier [CAFTA s168], and any of the following scenarios applies:- the vehicle was sold otherwise than as a second-hand vehicle and the dealer represented it as a demonstration vehicle, and the defect occurred before the warranty expired
- the vehicle was sold subject to an unexpired manufacturer's warranty and the defect occurred before it expired
- the vehicle was sold within ten years of being made and had at the time of the sale been driven less than 160,000 km (30,000km in the case of a motorcycle).
- the defects were caused by damage done to the vehicle, either accidentally or maliciously, while it was in the buyer's possession
- the defects arose because the vehicle was misused or driven negligently after the buyer had taken delivery
- the defects arose because the vehicle was used for motor racing or rallying after the purchaser had taken delivery
- the defects arose from superficial damage, such as to the vehicle's body, paintwork or upholstery, that would have been apparent upon a reasonable inspection of the vehicle carried out when it was sold or delivered to the buyer
- the defects occurred in an accessory that didn't come with the vehicle when it was made
- the contract of sale expressly states that the warranty provided by s168 of CAFTA does not apply. This exclusion clause in a contract can only operate if, at the time of signing the contract, the buyer understood the document containing the exclusion and its effects, and they signed this document at a place other than the dealer's business premises and it was witnessed by a person nominated by the Department of Industry, Tourism and Trade or a member of the police force (CAFTA s169(4)(b)(ii)). Also, before the buyer signed the contract, the witness must have read them a prescribed warning about the rights they would be foregoing by signing. The other conditions implied by the ACL can't be excluded from the contract (see Contracts and consumer protection ).
- commercial vehicles - defined as vehicles made or adapted for carrying goods or ten or more people or for commercial or agricultural use. The definition doesn't include utilities, station wagons, panel vans, camping vehicles or four wheel-drives, unless the buyer gives the dealer written confirmation that the vehicle is to be used primarily for commercial purposes [CAFTA s125(2)]
- a vehicle or class of vehicles the Minister declares to be exempt under s168 of CAFTA
- a used vehicle that has been continuously in the buyer's possession or under their control for at least three months immediately preceding the sale
- a vehicle sold to a trade owner
- a vehicle sold in an auction conducted by a licensed auctioneer
Consumer guarantees under the ACL
It is important to note that the consumer guarantees under the ACL apply in addition to the warranty provided under s168 of the CAFTA (see Contracts and consumer protection ). Even though a contract may not expressly state that the dealer guarantees the quality of the vehicle being sold, the contract includes implied conditions and warranties of quality. The ACL specifies that where a person supplies goods to a consumer (other than by auction), there is an implied condition (or 'guarantee') that the consumer will receive full ownership (guarantee to title) of the goods supplied under the contract, and that they are of acceptable quality. In addition, where the consumer directly expresses or implies the purpose for which the goods are being acquired in discussions with or in written communications to the supplier, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose. There is no one-size-fits-all definition of acceptable quality when it comes to second-hand vehicles, as this ultimately depends on the particular circumstances of the vehicle and its purchase. However, a lack of quality can be established through a mechanical check by the Automobile Association of the Northern Territory (AANT) or an independent mechanic. If it can be established that the dealer's breach of a consumer guarantee is a 'major failure', the consumer may reject the vehicle by giving the dealer written notice or by returning the motor vehicle and supplying details of the fault [ACL s259]. If repeated minor faults are experienced and the vehicle is frequently in for repairs, these may constitute a major failure. Contact NTCA for clarification.New car warranties
Most new motor vehicles are covered by manufacturer warranties, which vary between brands. Check what warranties are on offer for the vehicle you are intending to purchase as the terms, conditions and warranty periods may vary considerably between brands and dealers. Identify any faults with the vehicle as soon as possible and get them fixed early, within the warranty period. When repairs are carried out under warranty, they should be carried out by a manufacturer-approved mechanic using genuine manufacturer's spare parts, otherwise the warranty may be affected. If you are in doubt about a mechanic or the parts to be used, contact the vehicle manufacturer to check. Also, if you are fitting any non-standard optional features after delivery, check with the vehicle manufacturer to see if this will affect the manufacturer warranty. Even features like special indicators and lights may affect the warranty, as these parts connect into the electrical system of the vehicles. Where a manufacturer or dealer warranty has already expired, you may still have rights under ACL consumer guarantees, which can apply beyond the expiry of any manufacturer or dealer warranty. Whether ACL consumer guarantees apply is assessed on case-by-case basis, taking into account the individual circumstances of the car sales deal, such as the type of vehicle and the price that was paid, written descriptions of the vehicle when it was sold, and any written statements regarding the purpose for which the vehicle was purchased.Getting out of a car deal
A consumer who is unhappy with a car purchase contract may be legally entitled to get out of it. The two main objectives in getting out of (or avoiding) a used car contract are to cancel the contract and recover the deposit. Under the law, there are several circumstances where a consumer can terminate an agreement, such as when:- a condition precedent (a condition that must be met before the contract comes into effect) has not been or has yet to be fulfilled
- the goods are not of acceptable quality or not fit for the purpose for which they were bought or for which they are commonly used [ACL s54]
- a trader misrepresented a major feature of the sale to the consumer who relied on that misrepresentation to enter into the agreement
- in relation to used cars only, the trader has breached s160 of the CAFTA by selling a second-hand vehicle using the wrong contract form
Failure of a condition precendent
A contract is subject to a condition precedent when the dealer and the buyer agree that the sale will not be final until a certain event has occurred. A common condition precedent is to make a contract subject to a satisfactory mechanical check organised by the buyer. A buyer who signs a contract on this basis can choose not to continue with the contract if the check finds the vehicle to be unsatisfactory. Another common condition precedent is to make the agreement subject to and conditional upon the buyer obtaining finance on or before the delivery date for the vehicle. If the contract is subject to finance and the financing arrangement falls through, the agreement can be cancelled as long as the buyer has made an application for finance and been refused.Breach of implied conditions
Where the breach of a consumer guarantee amounts to a major failure, rather than choosing a replacement, the consumer can also choose to return the vehicle and receive a full refund (see above Consumer guarantees under the ACL)Odometer tampering
The CAFTA states that a dealer must not offer for sale a motor vehicle that has had the odometer altered or replaced without first informing the buyer. Significant pecuniary penalties apply. The buyer may have grounds to take legal action against a dealer convicted of such an offence if they paid more than the fair value for the motor vehicle. The court determines the 'fair value' of a motor vehicle and may call on both expert witnesses and anecdotal evidence to do this.Misrepresentation
A dealer who makes a false or misleading statement to a buyer, which induces them to enter a contract, may have made a misrepresentation or engaged in misleading conduct. As with any other consumer contract, the buyer may be entitled to rescind the contract or claim compensation (see Contracts and consumer protection ). If a misrepresentation is made, the buyer can cancel the contract by giving notice to the dealer prior to or within a reasonable time of accepting the vehicle, or the buyer can claim damages. What constitutes 'a reasonable time' depends upon the circumstances. Common misrepresentations include statements about a car's performance, speed, condition and accident history, mileage, and assertions that paying a deposit and signing a contract doesn't constitute a binding agreement, but merely serves to hold the vehicle until the buyer makes a final decision. Other false or misleading representations may relate to the year in which a vehicle was made or first registered, the model, or odometer tampering (alteration or replacement).Changing your mind
A buyer should always be cautious when entering into a contract to buy a car. Although the common law and statutory provisions offer some protection in certain circumstances, much less protection is available to a buyer who simply changes their mind and no longer wishes to proceed with the sale. They should remember that an offer to purchase can be withdrawn at any time before it is accepted. Where a contract has been signed and there is no condition precedent and no misleading conduct or other unfair behaviour that has been used to induce the buyer, the dealer may be able to enforce the contract. If the contract is enforceable, a buyer who wants to opt out will usually lose any deposit paid - up to 10% of the purchase price. Where the deposit is greater than 10% or the dealer is claiming an amount greater than the actual deposit, the buyer should obtain legal advice or contact NTCA.Compensation
Compensation (damages) may be payable to either the dealer or the purchaser where a contract has been cancelled and a dispute arises over each party's entitlement. Damages can be sought where:- the contract was rescinded validly and the damages aim to restore the parties to their original positions
- one party wrongfully cancelled the contract and the other suffered loss as a result. Damages can also be claimed from a dealer who has made false or misleading representations described above. A buyer may be entitled to recover the difference between the vehicle's purchase price and its fair value.
Other considerations when buying a motor vehicle
When buying a car, there are other important things to consider, for example, getting the right car for you, terms and conditions, warranties, finance and insurance.Choosing the right motor vehicle for you
When you are preparing to purchase a vehicle, you should consider the following:- what do you plan to do with your vehicle (for example, driving, off-road, just on weekends, etc)?
- what is your price range and how will you pay for it?
- what vehicle features do you want (for example, fuel economy, air conditioning, warranty period, reliability, etc)?
- what size vehicle are you looking for (for example, a sedan, hatchback, van, etc)?
- are you planning to re-sell or trade it in later on? You should also check road tests in magazines and talk to others who have bought similar vehicles about their experiences. Often it is useful to talk to a range of motor vehicle dealers and motor vehicle associations to get a better idea about the right vehicle for you. Don't forget most dealerships also allow you to test drive vehicles.
- Check online reviews and independent car magazines and websites.
Working out the real on-road costs
You will need to work out what it will really cost you to get your new vehicle on the road and you should prepare your budget accordingly. The full 'on-road' cost of a new vehicle may be more than the price quoted in an advertisement. Usually these prices are qualified in advertisements to show that other charges, like stamp duty, registration or dealer delivery fees apply. In addition there may be extra costs for additional features that you might like to have applied, such as window tint or paint protection. If you think that an advertisement for a motor vehicle is misleading or false because it doesn't tell you the whole story or the deal contains hidden charges, it may be unlawful (see Contracts and consumer protection ). You should contact NTCA or the ACCC about this. You will also need to take out motor vehicle insurance on your vehicle. Get some quotes from insurance companies (see Insurance ). If you require finance to purchase your motor vehicle, you will have to determine if you can afford the repayments and interest rates (see Buying on credit ). Lastly, don't forget there are normal running costs of a vehicle, like vehicle registration, fuel, servicing and you should factor these into your budget. Setting a budget and spending wisely is a way to avoid impulsive purchases that you may later regret. Learn more about budgeting here from Moneysmart: https://moneysmart.gov.au/budgeting/budget-plannerFinance and insurance
If you need finance or a loan to pay for your motor vehicle, shop around for the best deal rather than relying solely on the motor vehicle dealer where you are buying your vehicle. You may, for example, be able to access a personal loan from a credit provider, such as a bank or credit union, at a cheaper interest rate than what the finance company used by the dealer can offer. Be sure you can afford to repay any finance or loan you take out, so that you do not get yourself into financial difficulties that can lead to unmanageable debts or bankruptcy (see Debts & Bankruptcy ). For insurance, shop around to find the most competitive premiums and policy coverage. Ensure your vehicle is insured before you take delivery of it (see Insurance ). A car sales person may offer you extra insurance such as tyre, rim, paint and windscreen insurance. If you have comprehensive insurance you may already have sufficient cover for these and other add-on insurance products. The Australian Securities and Investments Commission (ASIC) Money Smart website has some very good information on what you need to know so you don't get caught paying for something you don't need. More information can be found here: https://www.moneysmart.gov.au/insurance/car-insurance/add-on-insurance Keep in mind that salespeople are encouraged to sign you up for additional costs.Trading in or selling your old vehicle
If you already have a vehicle, you may be able to trade it in at the dealership where you are buying your next vehicle. Be prepared to negotiate a price for your old vehicle with the dealer as they may have some 'room to move' on your next vehicle's sale price. Alternatively, you may get a better price by selling it privately. If you do decide to trade it in or sell it privately you can get an idea of the value of the vehicle by searching the Redbook website here: http://www.redbook.com.au/. This website will give you some idea of the potential value of your old vehicle, however the value also depends upon the current condition of the vehicle and any after-market features and modifications. You can also search for your vehicle at the Carsales website: https://www.carsales.com.au/ Remember that vehicles in the NT tend to be a little more expensive, and that the dealership will want to sell your trade-in for a profit. You could also talk to other motor vehicle dealers or mechanics to get an estimate of what your old vehicle is worth.Taking delivery
Whether brand new or second hand, check your new vehicle thoroughly before you sign to accept delivery. Check that any non-standard optional features that you ordered are included and that the vehicle has a spare tyre, tool kit and jack. Check for any damage to paintwork or any faults in the electrics. Once delivered, remember that new vehicles have warranty periods, so if you identify a problem with the vehicle, take it back to the dealer to be checked and fixed as soon as possible. It is also important to keep an eye on any vehicle recalls that apply to your new vehicle. Vehicle recalls can be searched here: https://www.vehiclerecalls.gov.au/recalls/browse-all-recallsUseful organisations
Licensing NT
Licensing NT within the Department of Industry, Tourism and Trade is responsible for matters relating to the licensing of motor vehicle dealers. Website: https://nt.gov.au/industry/licences/licensing-nt-online Phone: (08) 8999 1800 Email: DITT.Licensingnt@nt.gov.auMotor Trades Association SA/NT
Many reputable dealers are members of the Motor Trades Association (MTA). A person who is in dispute with, or has a complaint about, the conduct of a dealer who is a member of the MTA can contact the MTA. An officer of the association can assist by investigating the matter and attempting to find a resolution to the problem. Website: https://mtasant.com.au/ Phone: 8291 2000 Email: mta@mtasant.com.auNorthern Territory Consumer Affairs
NT Consumer Affairs publishes several fact sheets that provide useful information about buying a new or used car and your consumer rights: https://consumeraffairs.nt.gov.au/for-consumers/motor-vehicles. The Commission also provides a call centre where Fair Trading officers can advise you of your consumer rights and help you manage any consumer/trader disaccord that may arise. Website: https://consumeraffairs.nt.gov.au/ Phone: 1800 019 319 Email: consumer@nt.gov.auPersonal Property Security Register – Australian Financial Security Authority
A search for a small fee will show you if the vehicle you want to buy is recorded as free from debt, stolen or written off. Website: https://www.ppsr.gov.au/ Phone: 1300 007 777 (1300 00PPSR) Email: enquiries@ppsr.gov.au
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