In South Australia, the sale of secondhand cars by businesses is regulated by the Second-hand Vehicles Dealers Act 1995 (SA), and any references in this section are to this Act.
By contrast, buying a secondhand car from a private seller has few protections for a purchaser. More information about buying from a private seller is set out below.
Secondhand Car Dealers
No person may carry on a business of selling second hand motor vehicles unless she or he is licensed to do so [s 7]. The definition of what consitutes dealing in under the legislation 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 [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.
This information must also be displayed at any auction where second hand vehicles are sold.
Statutory Duty to Repair
Defects in a vehicle which make it unroadworthy or illegal to drive at the time of delivery to the purchaser must be repaired or made good by the dealer regardless of the price paid for, or the distance traveled by, the vehicle [s 23(7)].
In addition to the pre-condition that a car is roadworthy when delivered, dealers have a duty to repair defects in secondhand cars dependent on the price paid for the car, its age and distance travelled.
If the car was first registered more than fifteen years before the sale or driven more than 200 000 kilometres, there is no duty by the dealer to repair (aside from ensuring that it is roadworthy).
The duty to repair by the dealer is also limited by time or distance driven:
- 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 does not apply tyres or the battery (unless those would make the car unroadworthy), 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.
The dealer is also not responsible for repairs to damage caused by an accident or deliberate act by someone, or normal wear and tear. Insurance may cover accidental damage.
Purchasers may also have rights under the Australian Consumer Law in relation to a secondhand vehicle. For more information the consumer guarantees relating to acceptable quality of goods see Law Handbook page on Implied Guarantees.
It is possible for a consumer over 18 years of age to waive the dealer's duty to repair, although the consumer cannot waive his or her rights in relation to applicable consumer guarantees under the Australian Consumer Law. Before signing the waiver, the consumer must be given a Notice that explains the consequences of giving up the right to insist that the dealer repairs defects to the car. The consumer's signature must be witnessed by a Justice of the Peace, solicitor or proclaimed bank manager who is independent of the dealer.
The witness has the duty to ensure that the consumer understands the effect of the waiver before witnessing the signature. 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].
Repairs to the car under the duty to repair must be done to acceptable industry standards. A consumer is also required to deliver the car to the dealer for the repairs to be done, to give the dealer a reasonable opportunity to fix the problem. [s 24]
If the dealer cannot or will not repair the car in a reasonable time, a consumer is entitled to get assistance from Consumer and Business Servicesfor a conciliation conference. If this does not resolve the problem it may be necessary to apply for a Magistrates Court order.
If it is not possible or safe to deliver the car to the dealer, and the dealer is put on notice of the consumer's intention to have the repairs done by another repairer, it may be possible to claim the cost of the repairs from the dealer on application to the Magistrates Court.
The duty by a secondhand dealer to repair does not apply to motor cycles or to vehicles purchased at auction or immediately after an auction.
Cooling off period
Consumers also have the right to rescind (cool-off) a contract for a secondhand car bought from a dealer by delivering a written notice to the dealer within 2 business days of the signing of the contract.
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, both physical possession and legal title for the vehicle remains with the dealer, who must allow the purchaser reasonable access to inspect the vehicle. The right to rescind the contract does not apply if the purchaser takes possession of the car. Other rights may exist under the Australian Consumer Law relating to the consumer guarantee as to acceptable quality or misleading and deceptive conduct and if there is a problem, it is wise to get legal advice regarding a remedy as soon as possible.
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 security taken by the credit provider will be discharged [s 18B(9)].
Other Considerations when buying from a dealer
Any security held by a lender over the car is automatically discharged if it is bought from a dealer in the normal course of the dealer's business. A purchaser is also entitled to undisturbed possession of the car, as well as clear title. These guarantees apply under the Australian Consumer Law.
Buying a car privately offers few protections for the purchaser. However, there are a few steps that a purchaser can take before buying to avoid problems.
A private seller has no duty to repair a secondhand car. As a result it is essential to have the car checked over mechanically first. If any substantial claims are made by the seller regarding the car, such as its ability to tow a trailer, or year of manufacture or odometer reading, it is very wise to check the information for yourself. There is also no cooling off period when buying secondhand.
If you rely on something the seller told you about the car, and it was easy to check independently, and that information turned out not to be true, it could be a misrepresentation and may entitle you to ask for compensation. Get legal advice as soon as possible about your rights.
Money owing on the car
It is very important to ensure that there is no money owing on the car before you buy. You can obtain 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 the PPSR Website. 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. It may be very difficult to recover the purchase price from the seller once the lender repossesses the car, even though you have the right to ask for your money back,
The PPSR also records information about whether or not the car has been previously written off (economic write-off) or reported stolen. An economic write-off can be reregistered after strict testing, but a car that has suffered severe damage cannot, and must be taken off the road.
You can contact the PPSR by phone on 1300 007 777 (1300 00PPSR).
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:
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.