For consumers / Cars and car dealers
Cars and car dealers
A car that keeps breaking down is more than an inconvenience. In Victoria, buyers have rights under the Australian Consumer Law and under the Motor Car Traders Act. I also act for dealers.
In short
- The consumer guarantees apply to new and used cars sold by a business, as they do to other goods.
- The used car warranty from a licensed trader lasts 3 months or 5,000 km, whichever ends first.
- If you are not a trader or a company, you can cancel a car purchase from a licensed trader within 3 clear business days after signing, as long as you have not taken delivery.
- The guarantees do not apply to cars bought at auction or privately.
- Cost and next step: $1,320 for a review and a letter, including GST. Start online or call 1800 776 529.
Key numbers
3 months
Or 5,000 km, whichever ends first: the used car warranty from a licensed trader, for cars under 10 years old that have travelled less than 160,000 km.
3 days
Three clear business days to cancel a purchase from a licensed trader after signing, if you have not taken delivery and are not buying as a trader or a company.
$40,000
The maximum award from the Motor Car Traders’ Guarantee Fund.
Rights that apply to every car bought from a business
The consumer guarantees apply to new and used cars sold by a business, as they do to other goods: acceptable quality (including durability), matching the description, and fit for a purpose you made known.1 A serious defect, or a series of defects that keeps the car off the road, can be a major failure, which entitles you to reject the car and take a refund or replacement.2 In 2024 the Supreme Court of Victoria refused a dealer leave to appeal against a VCAT order to refund the full price of a used car whose hybrid system failed after about 2,400 km. A pre-purchase inspection made for the buyer had found no major faults. The Court held that an inspection takes a car outside the guarantee only if it revealed, or ought reasonably to have revealed, the defect the buyer complains of.11
The guarantees do not apply to cars bought at auction or privately.3
The used car warranty from a licensed trader
If a licensed motor car trader sells you a used car that is less than 10 years old and has travelled less than 160,000 km, the trader must repair defects so the car is in reasonable condition for its age. The warranty lasts 3 months or 5,000 km, whichever ends first.4 Some vehicles and parts are excluded (for example commercial vehicles, motorcycles, tyres and batteries), and defects listed on a defect notice given before the sale are not covered.5 The trader cannot contract out of the warranty.6
Cooling-off
If you are not a trader or a company, you can cancel a car purchase from a licensed trader within 3 clear business days after signing, as long as you have not taken delivery. The trader may keep the greater of $100 or 1% of the price for a used car, or $400 or 2% for a new car.7
The Motor Car Traders' Guarantee Fund
If a licensed trader fails to honour the used car warranty, does not pass good title, or fails to refund or deliver, you may be able to claim from the Guarantee Fund.8 Claims go to the Motor Car Traders Claims Committee, through Consumer Affairs Victoria, on the approved form; there is no fee, and the maximum award is $40,000. Only money actually lost is covered, and there is no fixed deadline, but a claim can be refused for unreasonable delay.9 A decision on a claim can be reviewed by VCAT if you apply within 28 days.10
For dealers
When a customer complains, the questions are the same from your side: is the defect covered, is it a major failure, and what must you offer? A careful reply early often prevents a VCAT claim. See For businesses.
What my $1,320 covers
I read the contract, the service and repair history, any defect notice, reports and messages; tell you which rights apply and what to ask for; and send a letter to the dealer (and the manufacturer, if appropriate) with a deadline. Where they apply, I also advise on cooling-off and a Guarantee Fund claim.
Questions
Have another question? Phone 1800 776 529 or send me a message.
Repeated failures can add up to a major failure, which gives you the right to reject the car rather than accept another repair.2
That depends on how the finance was arranged. Bring the finance contract; it affects how a refund is paid.
Not a separate one. The protections are the consumer guarantees, the used car warranty and the Guarantee Fund described above.
The law
- ACL ss 54 to 57.
- ACL ss 259(3), 260 (including s 260(2)).
- ACL s 54(1)(b) (auctions); s 54(1) (“in trade or commerce”).
- Motor Car Traders Act 1986 (Vic) s 54, including s 54(2B).
- Motor Car Traders Act 1986 (Vic) s 54(4) to (7), s 55.
- Motor Car Traders Act 1986 (Vic) s 56.
- Motor Car Traders Act 1986 (Vic) s 43, including s 43(4)(a).
- Motor Car Traders Act 1986 (Vic) ss 74, 76 (claims to the Committee: s 76(1)); Consumer Affairs Victoria, “Compensation claims” (lodgement, no fee, $40,000 maximum). The Consumer Legislation Amendment Act 2026 (Vic) pt 12 will move the claims function to the Director of Consumer Affairs Victoria, by 1 December 2027 at the latest.
- Motor Car Traders Act 1986 (Vic) ss 76(6), 77(2).
- Motor Car Traders Act 1986 (Vic) s 79(2).
- JJ International Holdings Pty Ltd v Al Fares [2024] VSC 707, [32] to [34], [46]; ACL s 54(7).
Last reviewed: November 2026. This page is general information about Victorian and Commonwealth law as at November 2026. It is not legal advice about your circumstances.
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Phone: 1800 776 529
Email: info@consumerlawyers.com.au
Hours: Monday to Friday, 9 am to 5:30 pm
Office: 435 Nepean Highway, Frankston VIC 3199 (by appointment)
I act for consumers and for businesses, but never for both sides of the same dispute. Before I start, I check that I have not acted for the other party.