A step-by-step guide to making and managing a car insurance claim if your motor vehicle is damaged in an accident or unforeseen event.
Motoring
Are there lemon laws for new and used cars in Australia?
Occasionally, motor vehicle buyers will find they have purchased a 'lemon' - a car that isn’t fit for purpose. How do you know if you've bought a lemon, and what can you do about it?
Unlike some states in the US, Australia doesn’t have a specific 'lemon law', but certain legislation does protect buyers of both new and used vehicles. There is Australian Consumer Law, which applies nationally, and consumer protection agencies in each state and territory, including Consumer Affairs Victoria.
If you do purchase a vehicle that doesn’t work, you may be entitled to a refund, replacement, or repair under the Australian Consumer Law - regardless of whether the vehicle is new or used.
Lemon cars and the law in Australia
What is a lemon car?
There is no legal definition of a 'lemon' in Australia. In general, it's a product with a persistent defect that prevents it from living up to expectations. In other words - the item doesn’t do the job it’s meant to do.
The term 'lemon' can apply to both new and used vehicles. In some cases, it may be the type of car you have, or it could be that you may have just (unluckily) received a poor example of it.
What is a manufacturer's warranty?
All new cars must come with a manufacturer's warranty that covers any faults and defects. The length of the warranty period may vary.
Some dealers or manufacturers may offer extended warranties for an additional cost. They may involve a locked-in service schedule and/or a restricted choice of mechanics.
What is a used car statutory warranty?
In addition to Australian consumer guarantees, used cars less than 10 years old that have travelled less than 160,000km are covered by a statutory warranty in Victoria. This statutory warranty covers buyers for three months or 5,000km (whichever occurs first) from the time of their purchase.
The trader must repair any faults covered during the warranty period in order to ensure the car is in a reasonable condition for its age. The trader is also obliged to list any faults not covered by the statutory warranty on a defect notice.
That warranty only applies to used vehicles purchased from a licenced motor car trader. It explicitly doesn’t apply to private sales or auctions. Before buying a used car from these sources, run a check on the car's Vehicle Identification Number (VIN) or chassis number on the Personal Property Securities Register to ensure there is no money owing on the car, that the car is not stolen, and that the car isn't written-off.
What is the consumer law on cars in Australia?
Australian Consumer Law (ACL) protects Australians purchasing motor vehicles with consumer guarantee rights. Certain rights apply to new and used cars, regardless of the type of warranty you have.
For example, these rights may include that a car must:
- be of acceptable quality, including that it is safe, durable and free from defects
- be fit for any purpose disclosed before the sale
- match the description provided or the demonstration model
- have spare parts and repair facilities available.
All new vehicles are required to comply with relevant Australian standards and some major brands may offer a five-year (or longer) warranty. Australian Consumer Law may still apply even if a vehicle is out of warranty.
Even the best car manufacturers can produce the occasional lemon. Image: Getty
What do I do if I have a lemon car?
If your new or used vehicle is demonstrably faulty, and it isn't meeting your consumer guarantees, then the business that sold it to you may be required to offer you a solution as the consumer. The solution could be a repair, a replacement, or a refund.
Contact your dealer in writing if you believe the car has a minor/major problem under the consumer guarantees in the Australian Consumer Law.
If the problem is minor, you may be required to accept a free repair if the dealer offers you one.
If the issue is major, you can request a repair, replacement or refund. The replacement must be of a similar type and value, as reasonably available. Refunds should be the same amount you have paid and in the same form.
The dealer or retailer must not tell you to take the problem to the manufacturer or importer.
What if the car dealer or trader doesn't fix the problem with my lemon car?
If the dealer doesn't respond, or doesn't recognise your consumer rights, you can complain to Consumer Affairs Victoria (CAV) if you have tried to resolve the problem with your dealer first.
If your lemon is a used car, you can make a claim to the Motor Car Traders Guarantee Fund if the dealer will not repair a fault covered by statutory warranty provisions. There is no fee to make a claim, and you can be compensated up to $40,000. Remember that your car must be less than 10 years old and have travelled less than 160,000 kilometres, with the fault occurring within 3 months and 5,000 kilometres of purchase.
The Victorian Civil and Administrative Tribunal (VCAT) is also authorised to hear cases where buyers seek to cancel the sale of a vehicle you have bought for $40,000 or less.
You can also make a report to the Australian Competition and Consumer Commission (ACCC). Note that the ACCC doesn't resolve individual complains; it simply collects complaints to inform compliance activities.
What if my mechanic fails to fix my car properly?
If your car is out of warranty and you pay a mechanic to fix your car, they are still subject to the Australian Consumer Laws for products and services. You can contact CAV if are unable to resolve the problem with your mechanic. You can also apply to VCAT for compensation from the mechanic.
The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product(s) issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.
