About this guide
Most complaints received by Consumer Protection regarding second-hand motor vehicles relate to repairs. These are covered by the statutory vehicle warranty under the Motor Vehicle Dealers Act 1973 (the MVDA), and/or consumer guarantees under Australian Consumer Law (ACL). Although only some vehicles are covered by the statutory warranty, all vehicles are covered by the ACL consumer guarantees.
Motor vehicle dealers must be licensed and comply with the law. If you don’t, you could face legal action, and lose your licence.
This guide highlights both yours and the buyers’ responsibilities and rights, and should help you to resolve issues.
If you have any questions after reading this guide, call Consumer Protection on 1300 30 40 54.
Consumer guarantees
All of the vehicles you sell come with consumer guarantees unless the vehicle is sold at auction.
These guarantees require that the vehicle can be used for the purpose it was bought, is of acceptable quality and matches the description given in any advertising.
Consumer guarantees are not limited by the age of the vehicle or the number of kilometres it has been driven. There is no set time limit on these guarantees – it will depend on what is reasonable.
The vehicle must be of acceptable quality. This means it must be:
- fit for purpose;
- acceptable in appearance and finish;
- free from undeclared defects;
- safe; and
- durable.
The standard of what is acceptable is based on what a typical buyer would expect given the age and price of the vehicle and what they were told about it before the sale. At a minimum, this means the vehicle must be roadworthy.
Your buyer is entitled to expect you to repair any major defects that were present at the time of sale and anything that makes a vehicle unsafe to drive (e.g. faulty brakes, faulty steering or major structural rust).
People who buy vehicles that do not meet the consumer guarantees are entitled to a replacement or refund for a major failure, and compensation for any reasonably foreseeable loss or damage.
If there is a major failure with the vehicle, it is up to your buyer to choose if they would like a refund or replacement.
A major failure will occur when the vehicle:
- Has a problem that would have stopped someone from buying it if they’d known about it.
- Has multiple minor problems that, when taken as a whole, would have stopped someone from buying it if they’d known about them.
- Is significantly different from your description.
- Is unable to be used for the purpose it was sold and can’t easily be fixed within a reasonable time.
- Is unsafe.
Your buyer is also entitled to have a vehicle repaired if it fails to be of acceptable quality where the issue is not classified a major failure.
Defects that you point out to your buyer before the sale are not covered by these laws. This does not apply to defects that make the vehicle unroadworthy.
If your buyer examines the vehicle before the contract is signed, or brings in a mechanic to inspect the vehicle, defects the examination or inspection should have revealed are also not covered by the guarantee.
You should provide your buyer with a written list of the defects you revealed before the sale is finalised. This will help protect you if the buyer complains about these issues after the sale.
You cannot remove your buyer’s legal rights in the sales contract.
Example: A person buys a 13-year-old car. There is no statutory warranty but consumer guarantees apply and the car must be of acceptable quality. If the car breaks down a week later, you will need to fix it.
Statutory warranty
The statutory warranty, under the MDVA, also sets out your legal obligation to fix certain defects in vehicles you have sold. Unlike the consumer guarantees, the statutory warranty only applies to some vehicles.
Under the MVDA, you must repair defects that appear during the warranty period, whether or not the defects existed at the time of sale. If a defect is likely to make the vehicle unroadworthy or unserviceable, you must do the repairs at your own expense.
The vehicle must be in a reasonable condition for its age after any warranty repairs.
Unroadworthy
A vehicle is unroadworthy when a defect could make the vehicle unsafe to drive, and a danger to passengers, other road users or pedestrians.
It is also unroadworthy if it requires any work to make it legal to drive on public roads.
Unroadworthy vehicles can be given a defect notice, commonly called a yellow sticker, by police or an authorised officer from the Department of Transport.
Consumer Protection officers can issue defect notices to vehicles being sold at dealerships.
The defect notice is a work order to make the vehicle safe while it is being driven. If the vehicle has a fault and is considered unroadworthy, the fault must be rectified by the dealer.
Unserviceable
If a defect does not make the vehicle unroadworthy, but is likely to make the vehicle unusable, it is classified as being unserviceable and you must repair the vehicle.
For example, a vehicle may not be considered unroadworthy by police because it has a leaking core plug, but the defect is likely to make the vehicle unusable so you must fix it at no cost to your buyer.
Length of warranty
The purchase price, age and how many kilometres the vehicle has travelled at the time of sale determines if the vehicle is covered by a statutory warranty, and for how long.
Only motor cycles purchased for $3,500 or more, and all other vehicles that can be licensed to be driven on roads, bought for $4,000 or more, are covered by a warranty.
The age of a vehicle is calculated to the end of the month of the compliance plate date. If only the month and year are shown on the compliance plate, the age is taken from the first day of the next month.
| Age of Car | Km travelled at time of sale | Warranty entitlement |
|---|---|---|
| Not more than 10 years old and: | Not more than 150,000 | 3 months or 5,000km (whichever happens first) |
| More than 10 years old but not more than 12 years old or: | Between 150,000 and 180,000 | 1 month or 1,500 km (whichever happens first) |
| More than 12 years old or: | More than 180,000 | Nil |
| Age of Motorcycle | Km travelled at time of sale | Warranty entitlement |
|---|---|---|
| Not more than 8 years old and: | Not more than 80,000 | 3 months or 5,000 km (whichever happens first) |
| More than 8 years old or: | More than 80,000 | Nil |
The warranty periods do not include the time you have the vehicle for warranty repairs. For example, if you keep the vehicle for two weeks to do repairs, the warranty is extended by two weeks.
If a fault is brought to your attention during the warranty period and the same fault is still evident, or becomes evident, within a reasonable period after the warranty has ended, it is generally your responsibility to fix it.
Example: A person buys a five-year-old car. Both the MVDA warranty and consumer guarantees apply. If the car breaks down after four months, the MVDA warranty will not apply but the car is covered by consumer guarantees.
Types of vehicles covered
The warranty covers:
- passenger cars that have more than one row of seats, including sedans, station wagons, hatchbacks, SUVs, dual cab utes, four-wheel drive, convertibles, people movers that are designed to take up to eight people (including the driver);
- motor vehicles built to carry goods or materials used in trade, business or industry, and having more than one row of forward-facing seats, such as dual-cab utes; and
- motorcycles (with or without a sidecar).
Types of vehicles not covered by a statutory warranty
Vehicles excluded from the statutory warranty provisions are:
- buses and vehicles licensed to carry nine or more people, including the driver;
- off-road motorbikes; • multi-wheeled open motor vehicles, such as quad bikes;
- motor vehicles built to carry goods or materials used in trade, business or industry, and having only one row of forward facing seats, including utes and panel vans; and
- caravans, trailers, camper trailers.
Consumer guarantees apply to all vehicles, including those that are not covered by a statutory warranty.
Telling buyers about the warranty
Form 4 – Vehicle particulars
When you offer or display a second-hand vehicle for sale, you must display a Form 4 – Vehicle Particulars.
The form contains the required particulars of the vehicle, including odometer reading, year of manufacture, and cash price. A Yes/No box on Form 4 must be completed to identify whether the vehicle is covered by the statutory warranty.
The Form 4 must be printed, typed, or written in a clear and legible manner and be clearly visible when attached to the vehicle. It should be placed inside the vehicle where it can clearly be read through the windscreen. If the vehicle does not have a windscreen, such as a motorcycle, the notice must be clearly visible to a person standing near the vehicle.
A copy of the form, signed by you as the dealer, yard manager or salesperson and the purchaser, must be retained for two years after the sale of a vehicle.
Before you sell a second-hand vehicle, you must also give the purchaser an information statement about the statutory warranty under the MVDA, if any, that applies to the vehicle. The information statements are Form 5A (statutory warranty) and Form 6 (no statutory warranty).
Form 5A – Information statement – for vehicles covered by warranty
Form 5A advises buyers that the vehicle is covered by the statutory warranty under the MVDA.
If a sale proceeds and the statutory warranty applies, Form 5A must be provided to the buyer at the time of sale prior to the contract being signed by both parties.
Two versions of Form 5A are available – one contains a quick guide to the main warranty items for motor vehicles and the other for motorcycles.
Form 6 – Information statement – for vehicles NOT covered by warranty
Form 6 advises buyers that the vehicle is not covered by the statutory warranty under the MVDA.
The form explains why the vehicle is not covered by the statutory warranty together with advice about the purchaser’s rights under the ACL.
If a sale proceeds and the statutory warranty does not apply, Form 6 must be provided to the purchaser at the time of sale prior to the contract being signed by both parties.
Warranty exemptions and exclusions
If you do not want to repair a particular defect in a vehicle, which is covered by the statutory warranty, it can be excluded, but only if a Notice of Defects Excluded from Warranty (Form 5) is filled in and:
- displayed on the vehicle before the sale so it can be clearly read through the windscreen;
- includes a detailed description of the defect and a fair estimate of the costs to repair it; and
- is signed by the buyer at or before the time of sale.
If you do not fully describe the defect, the notice will have no effect. For example, you cannot say the engine has a defect and the cost to repair it is $800. You must describe the actual defect so your buyer knows exactly what the issue is and what needs to be done to fix it, such as, excessive exhaust smoke – piston rings require replacement, about $800 to repair.
You must give your buyer a copy of Form 5 at the time of sale. If you don’t give your buyer a copy, the form is not signed or was not placed on the vehicle prior to the sale, it has no effect.
If the estimated cost of repairs on the notice turns out to be less than the fair cost of the repairs, your buyer is entitled to claim the difference in cost from you.
How do the statutory warranty and the consumer guarantees work together?
All cars are covered by the consumer guarantees. Only some cars are covered by the statutory warranty. Both the consumer guarantees and the statutory warranty require cars to be free of major defects and anything that makes it unsafe to drive. The statutory warranty has limits on how and when it applies. The consumer guarantees will depend on what is reasonable in the circumstances.
Repair obligations
Carrying out repairs
If you carry out repairs to a vehicle, you should tell customers if you are doing these under consumer guarantees or under the statutory warranty.
Faults covered by consumer guarantees or the MVDA warranty should be fixed at no cost to the customer and without using any extended warranty products they have purchased (unless the product specifically covers these repairs).
When a customer returns a vehicle for warranty repairs, the time you have the vehicle for warranty repairs is added to the warranty period.
If you hold the vehicle for longer than is considered normal for a particular repair, your customer may be able to claim damages from you to cover expenses, such as hire cars or taxis.
Your customer does not have to return the vehicle to you for repairs, however, we recommend they contact you in the first instance.
If your customer has the vehicle repaired elsewhere, you may only have to pay what it would have cost you to repair the defects. If a vehicle goes back to you two or three times for the same repair, your customer may exercise their right to take the vehicle elsewhere and claim the full cost of repairs from you.
When you return the car to your customer, you should give them an itemised list of what has been done. This can avoid disputes later if your customer complains that you did not fix a particular defect.
Returning the vehicle for repairs
If your customer lives close to your business and the vehicle can be driven, they should return it to you. If the vehicle cannot be driven, you should arrange to have it returned to your premises.
If your customer does not live near your business, you can either:
- arrange for a repairer in the area where the customer lives to fix the vehicle – it is your responsibility to pay the repairer; or
- arrange for the vehicle to be transported to your premises, repaired and returned to your customer – this should be at no cost to your customer.
Do you have to supply a courtesy car?
You do not have to provide a courtesy (loan) car while you are repairing your customer’s vehicle.
If you have to work on your customer’s car for longer than a day or two, you can arrange a loan car to reduce the chance of having to later pay your customer’s travel costs while a repair is being done.
If you give your customer a loan vehicle, you should make sure they read, understand and sign a document outlining their rights and responsibilities for the loan car.
Accessories and extras
Generally, you do not have to fix accessories or extras. However, there are some cases where you may have to repair faults with accessories.
For example, if a vehicle is advertised as having a reverse camera or Bluetooth, it is expected these accessories will work at the time of sale. If they don’t, you will have to repair them.
Anything listed and agreed to in the special conditions section of the contract will also need to be done.
Modified vehicles – dealer’s responsibilities
If a vehicle has been accessorised or modified, before you sell it, you are responsible for ensuring the vehicle still meets Australian design rules (ADRs) and the manufacturer’s specifications.
This includes fitting exhaust systems, or tyres, rims or suspension to change the vehicle’s height.
If a modification doesn’t meet the ADRs, which apply to the way the car is built and requirements for driving on public roads, it is illegal to drive the vehicle on public roads.
It is illegal to increase the weight of a vehicle above the manufacturer’s specifications by modifying it, if the vehicle is designed to tow trailers, caravans or boats.
You should not fit non-compliant accessories to a licensed road vehicle. You must know if modifications will make the vehicle non-compliant and are responsible for any illegal modifications on the vehicles you sell.
You can pay to have the vehicle modifications checked and approved by the Department of Transport. If the modifications are illegal you will have to pay to remove any accessories and repair the vehicle. If you have already sold the vehicle, your customer may be entitled to a refund.
Defect list
The publication contains a list. It is to be used as a guide only and does not include everything covered by consumer guarantees and the statutory warranty. It is the minimum that applies to all vehicles. Any defect that makes a vehicle unroadworthy, unserviceable or unsafe to drive must be repaired. The consumer guarantees will extend beyond the list and will include any other failure that makes the vehicle not of acceptable quality.
Example: A person buys a car and the reverse camera does not work. This does not make the car unroadworthy or unserviceable. But if you do not declare the defect to the buyer, you may have to fix it under the consumer guarantee.
If you have any questions, or need assistance resolving a claim, call Consumer Protection on 1300 30 40 54.