Here’s our guide to your rights if a car deal goes wrong.
If you buy a second-hand car from a dealer, you have rights under the Consumer Guarantees Act and the Fair Trading Act. The general effect of these laws is to help ensure that you are not misled about the nature of the vehicle you buy, and that it is of acceptable quality (taking into account its age and the price you pay for it).
If you buy privately, you’re not nearly so well protected. The Consumer Guarantees Act and Fair Trading Act don’t apply, although in some circumstances the Contractual Remedies Act does apply. If a private seller misleads you about the car, you can take them to a Disputes Tribunal.
You can take the following steps to protect yourself when buying privately:
- Check the car has a WOF less than 1 month old. (Legally, no car should be sold with a warrant issued more than a month before the sale unless the seller obtains from the buyer a written undertaking that (i) if the car is sold without a warrant, the vehicle will not be used until a warrant is obtained; or (ii) where the warrant is more than a month old, the buyer accepts this.)
- Use a vehicle history checking service to see if there’s money owing on the car.
- Arrange for a thorough mechanical check of the car. Use a mechanic or a specialist service - see the Yellow pages under “Vehicle Inspection Services”.
However, if the motor blows up while you’re driving the car home, you’ll be very lucky to see your money again.
Buying from a dealer
Under the Motor Vehicle Sales Act (MVSA) all car dealers must be registered.
Any person who holds themselves out as being in the business of motor vehicle trading, or who sells more than 6 vehicles or imports more than 3 vehicles within a 12-month period, is considered under the law to be a motor vehicle trader and must be registered (unless they can show the sales or importations were not done for gain). This includes car fairs, car consultants, car auctioneers, and online car sales services.
Dealers who trade without being registered face a maximum fine of $50,000 for an individual or $200,000 for a company.
You can check if a dealer is registered or banned at the Motor Vehicle Traders Register website or by phoning 0508 668 678.
A registered motor vehicle trader will guarantee consumers “good title” to a car. This means they can legally sell the car and you will not be liable for any debts hanging over it, unless those debts were specifically pointed out to you in writing. This protection does not apply if you buy privately.
Every vehicle sold by a trader must have a warrant of fitness less than 1 month old. If it doesn’t, the seller must obtain from the buyer a written undertaking that (i) if the car is sold without a warrant, the vehicle will not be used until a warrant is obtained; or (ii) where the warrant is more than a month old, the buyer accepts this.
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. A private seller at a car fair or using a display for sale operation must also display a CIN.
The information that must be disclosed in the CIN includes:
- The name and business address of the dealer.
- Whether the dealer is a registered motor vehicle trader, and if so 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.
When things go wrong
If the problem isn’t serious, the trader can choose what remedy to give you. They can either fix the problem, or replace the vehicle for free. They have to act within a reasonable time.
If the problem is serious – that is you wouldn’t have bought the vehicle if you had known the fault existed – then you can choose whether to accept a repair, a replacement or a refund.
If you and the trader can’t agree, get an independent written report on the fault, and what it would cost you to fix, from a qualified specialist, like a mechanic. You will have to pay for this report but you can then work out what remedy you can claim.
If the trader still won’t help you, you have 2 options: to take a case to the specialist Motor Vehicle Disputes Tribunal (MVDT), or use a regular Disputes Tribunal.
You should also make sure you have available any material relating to the sale of the vehicle (for example, the CIN) and any subsequent work you’ve had done on it (inspection reports, and so on).
Motor Vehicle Disputes Tribunal
The MVDT is run by the Ministry of Justice. There is a $50 fee for taking a claim to the MVDT. The hearings are in private and you can’t be represented by a lawyer - although you can consult a lawyer before the hearing.
There are time limits for going to the MVDT so make sure you take action as soon as possible.
The MVDT will ask the dealer to discuss the problem with you. If the problem isn’t resolved to your satisfaction, the Tribunal will set a date for a hearing.
The MVDT can hear claims up to $100,000 (or more if both the parties agree).
The MVDT can order remedies available under the Consumer Guarantees Act, Fair Trading Act, or the Sale of Goods Act.
For example, under the Consumer Guarantees Act you may be able to claim a refund, or require the dealer to meet the cost of repairs. Where there has been a breach of the Fair Trading Act, you may be able to claim for any resulting loss of value.
To contact the Motor Vehicle Disputes Tribunal:
- Ring them on 0800 367 6838
- Write to them at Motor Vehicle Disputes Tribunal, DX EX 11086, Auckland 1010
You also have the option of taking a claim to the standard Disputes Tribunal. However, the Tribunal can only hear claims up to $15,000 (or $20,000 if both the parties agree).
For more information, see our full guide to Disputes Tribunals.