Car buyers' rights

Here’s our guide to your rights if a car deal goes wrong.

18oct car buyers rights hero1 default

You fell for the dealer’s sales pitch, but it turns out your new wheels don’t “drive like a dream” after all. If you're sold a lemon, you don’t have to suck it up. You’ve got rights under the Consumer Guarantees Act (CGA) and Fair Trading Act (FTA).

Your rights

The CGA requires goods to be of acceptable quality, to be fit for purpose and to match their description. It applies to new and second-hand cars.

Acceptable quality depends on what a reasonable consumer would expect, given the age and type of vehicle, the price paid and any claims made by the dealer.

In practice, you’d expect a $50,000 car fresh from the factory to give you trouble-free motoring for much longer than a $5000 vehicle that’s been around the clock. But that doesn’t mean a dealer can sell you a car they know is a dud. You wouldn’t fork out $5000 for a vehicle that you knew would break down the second it was driven off the lot.

Dealers must also comply with the FTA, which means they can’t make false or misleading claims about a vehicle. The dealer can’t tell you the car is in “mint condition” but sell you a pup. Any trader breaching the act can be fined up to $600,000.

Sorting it out

If your new wheels don’t measure up to the CGA’s requirements, the first thing to do is ask the dealer to sort it out.

When the problem is minor, the dealer can opt to fix it, replace the car or give you a refund. If the dealer can’t or won’t fix it, or the problem is major, you can request either a replacement or your money back. You can also get the repairs done elsewhere and claim the costs back from the dealer.

In addition, the CGA gives you the right to claim consequential damages – that’s any reasonably foreseeable costs you’ve incurred as a result of the vehicle’s failure. For example, if you needed to hire a car because yours was off the road due to the fault, you can request the dealer reimburse you.

If the dealer’s playing hardball, you can get an independent inspection to support your case. Put your complaint in writing, telling the dealer what you expect it to do. If you’re rejecting the car, set out the reasons why.

Still no joy? You can take the case to the Motor Vehicle Disputes Tribunal (MVDT).

The MVDT is a low-cost avenue for resolving complaints. It costs $50 to lodge a claim and the tribunal can hear disputes involving amounts of up to $100,000. Last year, about 400 cases were lodged in the tribunal.

You need to provide evidence that supports your claim and shows you gave the dealer a chance to fix the problem. Your evidence is likely to include:

  • any ads for the vehicle and the consumer information notice (or window card)
  • the vehicle offer and sale agreement, showing what you paid for the car
  • your correspondence with the dealer
  • any independent inspection reports and quotes for repairs
  • colour photographs of any vehicle damage or parts involved in the dispute.

You should include a statement of how you want the dealer to fix things. The MVDT will notify the dealer of your claim and set a hearing date. It can also order its own expert report on the vehicle.

If you’ve bought the vehicle with a loan arranged by the dealer and you’re rejecting the car under the CGA, the dealer can be held liable for the loan. The dealer can also be held liable if they’ve misled or deceived you and you’ve been left out of pocket.

Who's a dealer?

Anyone who’s sold more than 6 cars or imported more than 3 vehicles in a year must be registered as a motor vehicle trader. Failure to register can result in a fine of up to $200,000. You can check the Motor Vehicle Traders Register to find out if a dealer is registered or banned.

Buying privately

Buy a vehicle from someone you meet in the pub or a private seller on Trade Me and you’re not protected by the CGA or FTA. You’ll have to rely on the more limited protections available under the Contract and Commercial Law Act.

If you think a private seller has misled you, you can take them to the Disputes Tribunal.
If you think a private seller has misled you, you can take them to the Disputes Tribunal.

You may be able to rely on the act if a seller misrepresents the car to you and you’re persuaded to buy it based on that misrepresentation. You need to show the seller’s claim was a major factor in your decision to buy.

If the seller’s misrepresentation leaves you seriously out of pocket, you may be able to cancel the deal.

The act also gives you the right to claim damages, such as the cost of any repairs you’ve had to make. But there are limits. You have a duty to minimise your losses – so your claim's not likely to succeed if you've continued to repair a vehicle with major faults.

You may also have some comeback if you've bought a car that doesn't match its description. The act says where goods are "sold by description" then they must correspond with that description. If they don't, you can reject them.

If you think a private seller has misled you, you can take them to the Disputes Tribunal. The hitch is sellers can contract out of the provisions of this act – and if they do, these rights won't apply.

There are also limits on the amount you can claim at the tribunal. It can only hear claims up to $15,000 (or $20,000 provided both parties agree). Fees are staggered, based on the amount of money you’re claiming for:

  • Under $2000, it’s $45
  • $2000 to $4999, it’s $90
  • $5000 to $20,000, it’s $180.

So if you’ve forked out $50,000 buying a motorhome from a private seller, the tribunal isn’t an option, unless you’re prepared to limit your claim. You’ll have to go to the District Court instead.

Consumer Information Notice

A dealer is required to attach to every motor vehicle displayed for sale a “consumer information notice” (CIN). There must be a link to the CIN if a trader is selling used cars on the internet.

The information that must be disclosed in the CIN includes:

  • The name and business address of the dealer.
  • The dealer’s registration number.
  • The cash price of the vehicle, including GST and any registration and licensing costs.
  • Whether any security interest is registered over the vehicle.
  • The year in which the vehicle was manufactured or the manufacturer’s designated “model year” or the year of first registration (for motor vehicles registered before 1 January 2007). For vehicles registered after 1 January 2007; the year of first registration anywhere in the world.
  • The make, model, engine capacity and fuel type of the vehicle.
  • The year in which the vehicle was first registered in New Zealand, or if the vehicle is a used import, the year it was first registered overseas.
  • The odometer (distance travelled) reading, or a statement that the odometer reading is or may be inaccurate.
  • Whether the vehicle is recorded on the motor vehicle register as having been imported as a damaged vehicle.
  • Whether the vehicle has a warrant or certificate of fitness and is registered, and the dates on which these expire.

If you buy the car, you must be given a copy of the CIN.

If a vehicle is displayed without a CIN, or the information on the CIN is misleading, you can complain to the Commerce Commission. The commission can prosecute for breaches of the Fair Trading Act. If you buy the vehicle and then discover you were misled you may be able to take action yourself under the Fair Trading Act.

Buying on credit

If you don’t have the readies for your new wheels, the dealer will be quick to offer finance. But you may be able to get a better deal with a personal loan from your bank, or even add the loan to your mortgage.

It’s not only the interest rate you need to consider, but also the fees that come with the loan. Look at the total amount you’ll have to pay for the vehicle. Lenders must make their rates and terms publicly available to help consumers compare options.

If you don’t have the readies for your new wheels, the dealer will be quick to offer finance.
If you don’t have the readies for your new wheels, the dealer will be quick to offer finance.

When taking out a loan, the Credit Contracts and Consumer Finance Act (CCCFA) gives you a cooling-off period of 5 working days. If you haven’t taken possession of the car, you can cancel both the loan and the agreement to purchase the car. However, if you’ve already driven the car off the lot, you’ll still have to find the money to pay the dealer for the vehicle.

The CCCFA obliges all lenders – including car finance companies – to lend responsibly. They must help you understand the costs of the loan and shouldn’t be throwing money at you that you can’t afford to repay.

If you do get into financial difficulties, you can make a hardship application to the lender, asking to postpone payments for a while or extend the term of the loan and reduce your regular payments.

If the lender unreasonably refuses your hardship application – or isn’t meeting its responsible lending obligations – you don’t have to put up with it. All lenders must belong to 1 of 4 dispute resolution schemes. You can make a complaint to the relevant scheme if the lender’s not playing by the rules.

Let the Commerce Commission know too. It can prosecute companies for breaches of the CCCFA.

Case study: the $10,900 Mazda

In October last year, Chelsea Slattery bought a 2005 Mazda from dealer Fairgocars. She financed the $10,900 car with a loan from Go Car Finance, arranged for her by the dealer.

Before she bought the Mazda, she noticed the vehicle’s airbag light was flashing and asked the dealer to fix it but the repair didn’t solve the problem and the fault returned. Ms Slattery took the vehicle back at least 3 more times to have it fixed but without success.

Ms Slattery told Fairgocars she was rejecting the car and stopped making loan payments. Go Car Finance subsequently repossessed the vehicle.

When the case went to the Motor Vehicle Disputes Tribunal, its expert assessor advised there was a fault causing the airbag light to flash. Whenever the light flashed, the car’s airbags and seatbelt pre-tensioners were disabled – a major safety issue.

The tribunal adjudicator found the fault meant the car wasn’t of acceptable quality and Ms Slattery was entitled to reject it. As she’d bought the car on finance arranged by Fairgocars, the dealer was held liable for her obligations under the loan contract.

Fairgocars had to refund Ms Slattery the money she’d paid towards the loan, as well as the fee she paid to have the vehicle assessed.

The adjudicator also recommended Go Car Finance reconsider its repossession practices, criticising it for repossessing the vehicle when there was an ongoing dispute.

Case study: the $9300 VW

Case study: the $9300 VW

Case study: the $9300 VW

In November last year, Lee Fowler bought a 2008 VW Touran with 100,794km on the clock from registered dealer Goldex Ltd. In January, the $9300 car started misfiring. After unsuccessful attempts to fix the fault, Mr Fowler took the car back to Goldex for repair.

The company told him it had done a software update and the misfiring problem had been fixed. But the problem hadn’t been resolved. The MVDT found someone had disabled the vehicle’s detection system so the engine control unit wouldn’t pick up the misfiring.

Based on evidence from the tribunal’s assessor, the adjudicator considered the misfiring problem was most likely to be the result of faulty fuel injectors, which would cost $2700 to replace.

Goldex denied it had anything to do with disabling the detection system, but the adjudicator found the car was in the company’s control when it happened, so Goldex had to take responsibility.

The adjudicator held the car wasn’t of acceptable quality, given the vehicle’s price, age, mileage and the short time Mr Fowler had owned it. He was therefore entitled to reject the car and get his money back plus the costs of the independent inspection for which he’d paid.

Case study: The $4500 BMW

Case study: The $4500 BMW

Case study: The $4500 BMW

Wellington resident Hitesh Vallabh bought a 2004 BMW with 139,200km on the odometer from Auckland trader Impulse Motors for $4500. But when the car was delivered in February, it wouldn’t start.

Mr Vallabh replaced the battery and got the car going, but soon after it the car developed a fault with the transmission. Quotes put the cost of repair at $4000.

Impulse Motors claimed there was no problem with the transmission and said Mr Vallabh had instead caused an electrical fault when he installed the new battery. It claimed this fault resulted in the car incorrectly registering a problem with the transmission.

But when the matter went to the Motor Vehicle Disputes Tribunal, the adjudicator found in favour of Mr Vallabh.

The adjudicator considered a reasonable consumer wouldn’t expect a vehicle of this age and mileage to develop a costly transmission fault so soon after purchase. As a result, Mr Vallabh was entitled to have the fault repaired and to be reimbursed for the costs of getting the problem diagnosed.

However, Mr Vallabh wasn’t entitled to claim back the battery costs as the adjudicator found he hadn’t given Impulse Motors the chance to fix this fault.

Got a problem?

Got a problem?

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Got a problem?

The Consumer Advice Line is available to all our members for support on any consumer-related issue. Our expert advisers can explain your rights and help you resolve problems with a retailer.

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Member comments

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Naomi T.
21 Nov 2018
Car

Hi there, my daughter purchased a car In July 2017. A couple of weeks later the car started over heating. At first the salesman refused to take responsibility for the repairs and became very very angry! They finally said that they would repair it and told my daughter she would need to pay the difference in which at that point I stepped in as an advocate for her. When the repairs had 'apparently' been done there was no job sheet and they wouldn't tell us where their mechanic was located. Since then, my daughters car has been to a mechanic 4 times as shes too frightened for approach these people again. Is there any advice you can give of what her rights are? Cheers

Consumer staff
23 Nov 2018
Re: Car

Hi Naomi,

Sorry to hear that your daughter has experienced this. As she’s already visited 4 other mechanics, her rights may be limited but we’d need more information. If you’re a Consumer member, feel free to call our advice line on 0800 266 786 to speak with one of our advisers.

To see if she has any rights under the Consumer Guarantees Act, you can contact your local Community Law Centre for advice (http://communitylaw.org.nz/free-legal-help/) or your local Citizens Advice Bureau (http://www.cab.org.nz/Pages/home.aspx).

If necessary they will help you if you need to go to the Motor Vehicle Disputes Tribunal: https://www.justice.govt.nz/tribunals/motor-vehicle-dealer-disputes/

Kind regards,

Natalie - Consumer NZ staff

Andrew S.
20 Jun 2017
Car Purchase

Afternoon,

I'm writing in regards to where I stand in regards to a car I brought one and half years ago. I purchased a 2009 Holden Clubsport R8 (first registered in Nz on 21/12/2009) with 66,000km for $50,000 from a MTA registered Car Dealership. One and a half years and only 25,000km later it made a tapping sound, as it was booked in for a service on the Tuesday and the tapping began on the Saturday I drove it round to the Mechanics and left it there untill the Tuesday. On Tuesday afternoon I recieve a call from the Mechanic and he informs me had I drove the car much further I would have completely blown the motor, he discovered a known fault with this Model which involves a faulty lifter in the engine. As it happens the lifter gave out causing damage to the Cam, he said I had two options, 1 being replace the lifter and cam and put it back together, however with missing metal shards running round the motor there would be a high possibility of the engine incountering more major problems in the near future. Option 2 being get the Motor completely reconditioned, both options requiring removal of the Motor, with a cost of anywhere between $4,000 to $10,000 depending on which option is taken. After hearing this news I contacted the Car dealer to come up with a resolution to the problem, after discussing the problem he said he would look into it for me but didn't think they could help me resolve the matter however had it been 7 or 8 year old model (which it is) it would be a diffrent story and I haven't heard back from him since, Paying over $50,000 for a car that lasted 25,000km since purchase and still has under 100,000km is unreasonable. Just wanting some advice on where I stand in regards to comsumers rights.

Thanks Kindly

Previous member
21 Jun 2017
Re: Car Purchase

Hi Andrew,

One of our advisers will contact you directly. You can also call our Advisory Service on 0800 266 786 as your membership includes this.

Kind regards,
Fonda - Consumer NZ staff

Andrew H.
25 Feb 2017
Internet Trading - Link to CIN and always reflecting Price

As a registered MVT you state that if selling cars on the Internet you should always have a link to the CIN. Please can you point out the relevant section of the MVT Act that reflects this obligation?
Also does this imply that ALL vehicles sold via Internet (or on a Dealer's Website) MUST have the price reflected OR is it acceptable to reflect "POA" (Price On Application).
Many thanks in advance for your response!

Previous member
28 Feb 2017
Re: Internet Trading - Link to CIN and always reflecting Price

Hi Andrew,

The obligation to display a CIN if selling cars online is imposed by section 14 of the Motor Vehicle Sales Act (www.legislation.govt.nz/act/public/2003/0012/latest/DLM188554.html?search=ts_act_motor_resel_25_a&p=1) and by the Consumer Information Standards (Used Motor Vehicles) Regulations 2008 (www.legislation.govt.nz/regulation/public/2008/0112/latest/DLM1271201.html#DLM1271225).

The “total cash price” of the vehicle (including GST and any on road costs) must be listed on the CIN, unless it is being sold by auction or competitive tender.

The requirement to display a CIN online or to have a link to it only applies where the vehicle can actually be bought online (on Trademe, for example) and doesn’t apply to a simple advertisement, where 'POA’ would be perfectly acceptable.

Regards,
Paul - Consumer NZ staff

Jacob S.
03 Mar 2016
How long post-purchase should CGA protections extend for a 50k mileage 4yo vehicle?

Take the scenario of a 4 year old vehicle with 50,000km on the clock, in good condition, and for good measure checked and passed by an independent vehicle inspector.

If a material non-wear and tear failure occurs or fault develops (>$1000 to fix, e.g. engine, auto transmission) within what timeframe post purchase would the dealer typically be obliged under the CGA to cover the costs. 6, 12, 18, 24 months?

Or what if the car was 3 years old, 40k km and just out of manufacturer warranty? Or going the other way - 6 years old & 90k km?

Is there much precedent out there as to circumstances (including factor such as vehicle age, condition and time post purchase) when vehicle purchaser claims to the MVDT or Dispute Tribunal seeking redress against dealers under the CGA have succeeded and/or failed?

If there was a bit of precedent data I'd love to see Consumer prepare a table mapping some typical age and odometer combinations (as a proxy for vehicle condition) to the minimum reasonable post-purchase period of CGA coverage for some typical fault types.

Keep up the good work.

Previous member
07 Mar 2016
re: How long post-purchase should CGA protections extend for a 50k mileage 4yo vehicle?

Hi Jacob,

Thanks for your suggestion. It’s a good idea but would be difficult to do in practice as price paid is also important.

For some idea of the complexity of the table needed, look at the 87 cases currently available from the Motor Vehicle Disputes Tribunal which include references to the Consumer Guarantees Act.

To search the MVDT’s decisions, use the link below and put ‘cga’ into the search bar:

http://www.justice.govt.nz/tribunals/motor-vehicle-disputes-tribunal/search-nzlii-nzmvdt

The cases are an interesting read!

Kind regards,

Maggie
Consumer NZ staff