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Use this fact sheet if you:

              are a consumer who has purchased a used car from a Licensed
               Motor Car Trader (LMCT); and

              the car is not a commercial vehicle and was not purchased at auction;

              you are unhappy with the transaction.

Motor car transactions can be complex. This factsheet is designed only to give you
general information about some, but not all, of your rights and obligations.

            !! IMPORTANT !!                        delivery of the car, or the LMCT
                                                   acted unfairly towards you or
Don’t delay in seeking legal advice: it            misled you in getting you to sign
can be much more difficult – and often             the waiver.
impossible – to get out of the contract
or exercise your rights if you let too            Notice of the cancellation must be
much time pass.                                    in writing.

Cancelling a motor vehicle contract               The LMCT must return your trade-
without legal grounds can have serious             in and most of the money you have
consequences. Be sure to seek legal                paid, but will keep 1% of the
advice before you take any action.                 purchase price or $100, whichever
                                                   is greater. You will usually have to
Cooling-off rights                                 pay for any damage (except fair
                                                   wear and tear) caused when you
The Motor Car Traders Act may allow
you to cancel a contract to purchase a             had the car.
used car from an LMCT within three                The three day cooling-off period
clear days of signing the contract. The            does not currently apply to new
three clear days does not count the                cars, commercial cars, or cars
day on which the contract was signed,              bought at auction.
Saturday, Sunday or a public holiday.
                                                  The law is due to change to
Some of the important things to note
                                                   introduce a three day cooling-off
are:                                               period in relation to new cars.
   Usually the LMCT will have you                 Under the new law, the LMCT must
    waive your cooling-off rights.                 return your trade-in but will keep
    However, the LMCT may not be                   2% of the purchase price or $400,
    able to rely on this waiver if it is not       whichever is greater. This change
    in the right form, if it is not signed         will come into effect no later than 1
    immediately before you take                    December 2008, so get advice
    about your rights to cancel a           conduct breaching the Fair Trading
    contract to buy a new car if you        Act. However, in order to protect all
    have recently signed up.                your rights you should seek legal
                                            advice immediately if you think you
Other reasons for cancelling under
                                            have been lied to or treated unfairly.
the Motor Car Traders Act
                                            Problems with the safety and
   If the trader has made a false          quality of the car
    representation about the odometer
    reading of the car; or                  Implied conditions and warranties

   If the contract for sale of the car     For most contracts there will be an
    does not contain the prescribed         implied term that the car be of
    particulars, terms and conditions;      merchantable quality and fit for
   If the car is substantially different   Whether the car you bought meets
    from that represented in the notice
                                            these standards will depend upon a
    attached to the car when it was
    sold,                                   number of things including the price,
                                            the apparent condition of the car and
then section 45 of the Motor Car            whether you inspected the car before
Traders Act may allow you to apply to       you signed.
apply to VCAT or the Magistrates
Court to rescind your contract (ie you      For more information on implied
return the car to the trader and the        conditions and warranties see our fact
trader returns the money you have           sheet on implied terms.
paid) .
                                            If there are problems with the quality of
You have 3 months for the time you          the car, it is important that you seek
signed the contract to apply for an         legal advice immediately. If you delay:
order. However, if you have
complained to the trader within 3              you may be deemed to have
months of signing the contract, you             accepted the car and therefore lose
have one month from the complaint               any right you may have to cancel
to apply for an order.                          (although you may still be able to
                                                claim damages);
Being misled or treated unfairly
                                               you may be unable to get the
If you feel you were misled, lied to,           evidence required to prove that the
taken advantage of or treated unfairly,         vehicle was defective when you
you may have rights to cancel the               took delivery.
contract or seek damages. The Fair
Trading Act 1999 (Vic) prohibits
misleading or deceptive and
unconscionable conduct. You will
generally have six (6) years to take
legal action from the date of the
Roadworthy certificate                           it only applies to a car which was
                                                  manufactured not more than 10
An LMCT should not sell you a used                years before the date it was sold
car without providing a current
                                                  and which has been driven for less
roadworthy certificate.                           than 160 000 kilometres;
A roadworthy certificate:
                                                 the warranty period is for 3
   is current if it has been issued in           months or 5,000 kilometres from
    the last 30 days;                             when you take delivery of the car,
                                                  whichever comes first;
   only relates to the most important
    safety related parts of the car that         the trader can exclude defects.
    can be easily inspected;                      The steps the LMCT must take to
                                                  exclude defects is reasonably
   does not tell you about the general           complex, so get advice if you have
    condition and mechanical reliability          signed anything relating to
    of the vehicle.                               exclusions;
The roadworthy certificate might tell
                                                 defects occurring in tyres, battery
you if the vehicle is safe to drive, but it
will not tell you whether it is likely you        and certain accessories are not
will have to pay some hefty repair bills          covered.
in the near future. If you want to know
about the mechanical soundness of a           If the LMCT is refusing to fix the car
car you will be need to get a                 and the car is covered by a warranty
comprehensive inspection done, like           under the Motor Car Traders Act you
those offered by the RACV and VACC.           can make a claim to the Motor Car
                                              Trader’s Guarantee Fund.
If you think you have been issued with
a false roadworthy certificate:               You may also have been sold an
                                              extended warranty under your
   get the car tested immediately by
    another licensed vehicle tester;          contract. This will set out what is
                                              covered, how much will be paid for
   make a complaint to VicRoads;             repair of a defect and the
                                              circumstances under which cover will
   seek advice from Consumer Action          be given.
    about your rights in relation to
    warranties and cancelling your            If the company who provided the
    contract, and taking action against       extended warranty is refusing to fix
    the original licensed vehicle tester.
                                              your car as agreed, seek advice about
Warranties                                    making a claim in the Victorian Civil
                                              and Administrative Tribunal.
Often a used car sold by an LMCT will
be covered by a warranty under the            Loan (credit) contracts
Motor Car Traders Act. Some things            If you have paid for the car with a loan
to note about this warranty are:              contract, you will need to consider
                                              what to do about it.
                                          reasonable attempts to obtain credit on
If the loan has already been drawn        reasonable terms, but were unable to
down, it is important that you do not     do so.
stop payments until you have sought
legal advice.                             The LMCT arranged insurance,
                                          credit, consumer credit insurance,
See our fact sheet on Linked Credit       and gap insurance
Disputes and get legal advice.
                                          Often an LMCT will sell or arrange
See also our sheets on Motor Finance      insurance, credit, consumer credit
Wizard                                    insurance and gap insurance. Often
                                          the LMCT will be paid a commission
Where things have to happen before        for selling you these products.
the contract goes ahead, like
getting finance                           Get advice if you do not understand
                                          exactly what you have been sold.
Often people will make their contract
with the LMCT subject to conditions,      Delayed delivery
like obtaining finance of the
                                          If the trader delays making the car
purchaser’s choice or subject to a        available for delivery by more than 14
satisfactory mechanical test.             days from the delivery date stated in
                                          the contract, you may be able to
If you agreed with the trader that        cancel the contract by notifying the
something would happen before the         trader in writing. This will not work if
deal would go ahead, and that thing       you caused the delay.
does not happen, then you may be          Canceling the contract without legal
able to end the transaction.              grounds

In some circumstances, under section
                                          If you try to get out of the contract
124 of the Consumer Credit (Victoria)
                                          without a lawful reason you could be
Code you will be entitled to cancel the   sued for damages.
contract even if you did not make the
contract subject to finance but you       If you are unhappy with the deal you
make it known to the LMCT that you        must get legal advice immediately, so
need finance, and you made                that you can weigh up your options.

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