You have to do your homework before buying a used car. If buying from a dealer, you’re covered by consumer law and statutory warranties. When buying from an individual, protection is limited. Make sure nobody sells you a lemon.
What is a lemon car?
In Australia, there’s no legal definition of a lemon car and no lemon laws. However, it’s when your dream car won’t work and keeps not working:
- Consumer Action Law Centre (CALC) says it’s a vehicle that: ‘has been repaired at least 3 times by the manufacturer or importer and still has a defect, or is out of service for 20 or more days because of a defect’.
- Australian Consumer Law says it’s when: ‘a reasonable consumer would not have bought the motor vehicle if they had known about the full extent of the problem’.
However, you are protected through Australian Consumer Law (ACL), in the Competition and Consumer Act 2010:
- The ACCC received over a third of total enquiries (28,000) about consumer guarantees or warranties in 2023 – three quarters were about cars.
- Consumer protection agencies received over 14,000 reports about used car sales in 2024–25.
What protection do you get from a dealer or individual when buying a car?
If you buy a used car from a dealer
There are 2 types of protection when buying a used car from a dealer: consumer law and statutory warranties.
Consumer law: This applies for an unspecified but ‘reasonable time’ and guarantees the vehicle you buy:
- is of acceptable quality
- matches the description provided
- is fit for any purpose expressed
- has spare parts and repairs available for a reasonable time.
Statutory warranties: In NSW, a statutory warranty lasts 3 months or 5,000 kms and covers cars under 10 years old with less than 160,000 kms on the clock. They cover faults with:
- brakes
- engine defects and serious oil leakage
- heater, demister and fan
- radiator leaks, core damage and blockages
- serious structural rust
- speedometer
- windscreen wipers and washers (not blades).
Essential to know
- Manufacturer warranties are a marketing tool and separate from statutory warranties.
- The Australian Competition and Consumer Commission (ACCC) found commercial arrangements between manufacturers and dealers about warranty rights could limit the dealer’s ability to provide a refund, replacement or repair.
If you buy a used car from a private individual or at auction
The story is different if you buy a car from a private individual or at auction. It’s unlikely to be covered by a statutory warranty. The only guarantees are:
- Title
- Undisturbed possession
- Undisclosed securities (no known debts or threat of repossession).
Note, you can’t make the private seller responsible for any defects.
Essential to know
Signs, such as ‘No refund’, ‘No refunds on sale items’ and ‘No refunds after 7 days’ contravene the ACL, with fines up to $10 million for dealers, up to $500,000 for individuals.
What to do before you buy a used car
Before buying a used car, always check whether it has been written off or stolen or whether it’s under a loan:
- Use the Personal Property Securities Register (PPSR) and put in the VIN or chassis number.
- It costs only $2 online or $7 for help on the phone.
To reduce your risk of buying a lemon and before you put any money down, get a reliable mechanic to do a full check of the vehicle.
What to do if you bought a lemon
If you bought a lemon from a licensed dealer, take these steps:
- Tell the dealer in writing before the end of the warranty period.
- Mention Australian Consumer Law and statutory warranty regulations in NSW.
- Take the vehicle back to the dealer or their qualified repairer.
- Contact the Australian Competition and Consumer Commission (ACCC) if you need more help.
What to do if my car is written off and I need a refund of the green slip.
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