Purchasing a second-hand vehicle – what do I need to know?

Purchasing a second-hand vehicle, Photo by Elvis Bekmanis on Unsplash

When the COVID-19 pandemic first hit, car companies around the world experienced significant delays and shortages in their productions. As a result, the price of second-hand vehicles increased significantly.

If you are purchasing a second-hand vehicle, there are a few factors that you need to be aware of.

The first, and most obvious step, is to conduct an initial inspection of the vehicle with a mechanic or car expert. This will ensure that any clear or visible issues or defects with the vehicle will be identified.

Buying through a dealership

It is common practice for second-hand vehicles to be purchased through a licensed dealership.

Within South Australia, the Second-Hand Vehicle Dealers Act 1995 (SA) places various obligations and restrictions on a licenced car dealership, including:

  • dealers cannot employee salespeople who – have either been convicted of a serious (indictable) offence of dishonesty, convicted of a summary offence of dishonesty in the last 10 years or have been suspended/disqualified from an occupation, trade or business in Australia;
  • dealers must repair defects on vehicles, even if the defects appear after the sale (subject to certain terms and conditions);
  • dealers must provide you with a ‘cooling off period’ of 2 clear business days for you to consider your purchase of a second-hand vehicle (noting that Saturday is considered a business day) – this cooling off does not apply to new vehicles or vehicles purchased at auction.

The dealer must also comply with the Australian Consumer Law guarantees (detailed below).

The ‘Second-hand Vehicle Compensation Fund’ has also been established to protect consumers against dealers that fail to satisfy their obligations. All dealers must pay into this fund when they renew their licence.

When purchasing a second-hand vehicle from a licensed dealer, they have a further obligation to display the following information (in a Form 1 notice affixed to the vehicle’s window) at all times while the vehicle is for sale:

  • the dealers name and business address;
  • the address at which any warranty repairs are to be carried out;
  • the name and address of previous owners (if not displayed, it should be made available upon request);
  • the total distance the vehicle has travelled (odometer reading) and a statement about the accuracy of the odometer reading; and
  • the warranty conditions that apply.

It is important that you review these details at length.

Buying at auction

There are significant risks in purchasing a second- hand vehicle via auction in comparison to purchasing through a licensed dealership.

These risks include:

  • you may not have an opportunity to test drive the vehicle or inspect it properly before auction;
  • the cooling off period does not apply; and
  • if the vehicle is sold on behalf of a person/business that is not the dealer, the statutory rights under the Second-Hand Vehicle Dealers Act 1995 (SA) will not apply.

Where the vehicle is sold at an auction house, there must be a notice on the vehicle’s window that provides the following details:

  • auctioneer’s name;
  • the name and address of previous owners (if not displayed, it should be made available upon request);
  • the total distance the vehicle has travelled (odometer reading) and a statement about the accuracy of the odometer reading; and
  • whether the vehicle is covered by statutory warranty.

Again, it is imperative that you review these details at length.

Consumer guarantees

Under the Australian Consumer Law, you automatically receive consumer guarantees when you purchase a second-hand vehicle from a licenced dealer. As such, the vehicle must:

  • be of acceptable quality;
  • be reasonably fit for any purpose you or the supplier has specified;
  • match any sample or demonstration model;
  • be accurately described;
  • satisfy any extra promises or ‘express warranties’ made by the dealer.

It should be noted that these guarantees cannot be excluded, even if parties enter an agreement. Ultimately, if a guarantee has not been met by the dealer, you are entitled to a remedy.

Private sales

It is really important to note that a private seller of a vehicle is not bound by the same laws and obligations as a licenced second-hand vehicle dealership and as a result:

  • you don’t get a cooling-off period;
  • you won’t get a warranty or consumer guarantees;
  • you can’t access the ‘Second-hand Vehicles Compensation Fund’ if anything goes wrong;
  • for imported vehicles, you may not be aware who imported it, you may not get insurance after a certain age and the odometer reading and the date of manufacture are sometimes not accurately recorded.

For private sales, we strongly recommend that you check the Personal Property Securities Register at www.ppsr.gov.au to ensure that there is no money owing on the vehicle and that the vehicle hasn’t been flood damaged or written off.

It is also good practice to check the vehicle’s registration through the Service SA website to ensure that the vehicle isn’t recorded as stolen, written-off or defected.

When purchasing a second-hand vehicle privately, it’s buyer beware.

Other matters to consider

During the process of purchasing a second-hand vehicle, you should also give consideration to the following:

Any queries with respect to transferring or registering the vehicle should be directed to your local Service SA centre.