Your rights when you buy a used car

What are your rights if your car spends more time in the service centre than on the road?
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  • Updated:16 May 2006

01.Car lemon laws

New car

When you decide to buy a new car rather than a used one, you probably expect to buy the peace of mind of faultless performance for at least a few years. And in the vast majority of cases you won’t be disappointed.

But every so often a new car will develop a problem. You take it back to the dealer to be fixed under warranty. But a little while later the same problem comes up again. You’re a bit suspicious now, have a closer look at the car, and notice a couple of other things that aren’t quite as they should be. So the car goes back to the service centre.

Months down the track, your car seems to spend more time at the dealership than on the road, because a problem just doesn’t seem to be fixable, or new ones keep creeping up. You’ve bought yourself a lemon.

Please note: this information was current as of May 2006 but is still a useful guide today.

What's a lemon?

In the US, all states have ‘lemon laws', which give consumers the right to get their money back or a new replacement car if they buy a lemon. There, a car qualifies as a lemon if the same defect can’t be repaired in a certain number of attempts, and/or if the car has spent a certain amount of time in the workshop over a 12–24-month period while still under warranty. The problems must be due to a manufacturing fault rather than a design fault present in all models of a batch (which would be covered by a model recall) or a fault of the dealer.

In Australia there are no comparable laws. There’s some protection under the Trade Practices Act, which requires products to be of merchantable quality and fit for their purpose. While ill-fitting carpet or trim are unlikely to make a car unmerchantable, a faulty gearbox or engine may. However, in practice it’s proven very difficult for consumers to get a full refund on their problem car or have it replaced with a new one.

Dealers and manufacturers will usually keep repairing problems under warranty, but repeated repairs mean the car’s unavailable and you have to find other ways of getting around. And eventually the warranty will run out, and you may still have to foot further repair bills — or decide to pass the problem on to an unsuspecting buyer…

Lemon laws required

We’d like to see the introduction of lemon laws in Australia. They may only apply to a few cases each year. But if a car is genuinely unfixable, you should be able to return it to the dealer for a replacement or refund — as you can do with any other merchandise that can’t be fixed.

What you can do

  • Every lemon saga starts with a first problem. So keep any invoices and other paperwork relating to repairs right from the beginning.
  • If there are ongoing problems your repairer can’t fix, complain to your dealership manager in writing, including any supporting documentation.
  • If you get no joy from the dealer, it’s time to approach the manufacturer for a solution. Even if you’re feeling pretty annoyed and stressed by this stage, it pays to remain calm and objective when negotiating. If composing strong but still polite letters isn’t your forte, the CHOICE book Put it in writing can help you find the right words.
  • If contacting the manufacturer doesn’t result in a satisfactory solution, get in touch with your state’s motoring organisation for an independent inspection of your car.
  • You can also lodge a formal complaint with your state’s fair trading or consumer affairs department. The department generally tries to mediate a solution between you and the dealer or manufacturer. If that’s unsuccessful, you usually have the option of taking the matter to a small claims tribunal or similar (your state’s fair trading/consumer affairs department will advise you).
  • Finally, if the tribunal decision doesn’t go your way, you could decide to use the court system — but that can very quickly become very expensive.


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