Buying a used car from a licensed dealer in Victoria: your rights

In Victoria, anyone in the business of buying and selling cars must hold a licence as a licensed motor car trader (LMCT). Buying from a licensed dealer usually costs a little more than buying privately, but Consumer Affairs Victoria notes it gives you greater protection under the law. These are the main protections, and what you need to do to rely on them.

1. Check the dealer is licensed

A business that trades in cars must be licensed, and anyone who buys, sells or exchanges four or more cars in 12 months is treated as a trader under the Motor Car Traders Act 1986. Licensed dealers must:

• show "LMCT" followed by their licence number in every advertisement
• tell you that they are a motor car trader
• display their licence at their place of business

You can confirm a dealer is licensed by searching their name or number on Consumer Affairs Victoria's public register of motor car traders. Driveon Australia's licence number is LMCT MCT-0012380.

2. Read the used car notice on the window

Every used car a dealer offers for sale must carry a used car notice on the side window. It's a quick way to check the key facts before you go further. It must show:

• the odometer reading recorded when the dealer acquired the car
• the cash price, and a single price that includes all fees and duties
• the build and compliance dates, registration number and VIN
• whether the car has ever been on a written-off vehicles register
• whether the car is covered by a statutory warranty
• the dealer's LMCT number

When you buy, the dealer has you sign a copy of the notice and gives you a copy to keep.

3. The statutory warranty

A used car bought from a licensed dealer in Victoria comes with a statutory warranty if both of these apply:

• it was built no more than 10 years before the sale date (going by the build or compliance plate), and
• it has travelled less than 160,000 km.

The warranty lasts for 3 months or 5,000 km, whichever comes first, from delivery. If a defect appears in that time, the dealer must arrange and pay for the car to be repaired so it's in reasonable condition for its age. That includes towing if the defect means the car can't be driven, and the time it spends being repaired is added to the warranty period.

What the warranty doesn't cover

• defects listed on a defect notice that was attached to the car and that you signed before buying
• accidental damage, misuse or negligence after delivery
• tyres, the battery, and accessories such as the radio or media player, phone kit, GPS, alarm and remote key pad
• commercial vehicles and motorcycles

Important: contact the dealer before you arrange any repairs. Consumer Affairs Victoria warns that if you arrange repairs first, the warranty may become void and you may have to pay. A dealer can't contract out of the warranty, so any term in a contract that tries to limit it has no effect.

4. Your 3-day cooling-off period

After you sign a contract with a dealer, you have three clear business days to change your mind. Weekends and Victorian public holidays don't count. To cancel, give the dealer written notice before the period ends, and make sure they've received it.

If you cancel a used car purchase, the dealer refunds what you've paid, minus $100 or 1% of the purchase price, whichever is greater. If you traded in a car, the dealer can't sell it during the cooling-off period and must give it back, and any linked finance contract is cancelled.

The cooling-off right does not apply if:

• you take delivery of the car during the cooling-off period (you automatically lose the right)
• the buyer is a company or another motor car trader
• the car is a commercial vehicle, or you bought it at a public auction

5. Clear title: no hidden finance

A licensed dealer must clear any finance or other security interest registered against a car before selling it. Consumer Affairs Victoria says licensed dealers must, by law, give used car buyers a guarantee of clear title. You can still run your own PPSR check for $2 using the car's VIN if you'd like the certificate for your records.

6. Roadworthy certificate, transfer and duty

• Roadworthy certificate (RWC): a dealer selling a registered car must give you a current RWC, meaning one issued within the last 30 days. An RWC confirms the car met roadworthy standards when it was inspected. It isn't a guarantee of mechanical reliability.
• Transfer: when you buy from a dealer, the dealer manages the registration transfer for you.
• Stamp duty: you pay the motor vehicle duty to the dealer, who lodges it with the transfer. Once you've paid the dealer, you have no further responsibility for the duty. See our guide to stamp duty and transfer costs.

7. Australian Consumer Law guarantees

Separately from the statutory warranty, cars bought from a dealer are covered by the consumer guarantees under the Australian Consumer Law. The car must be of acceptable quality, fit for any purpose you told the dealer about, and match its description, and you're guaranteed clear title. What counts as acceptable quality depends on things like the car's age, price and condition. A used car isn't expected to last as long as a new one, and a defect the dealer told you about before you bought isn't covered.

The guarantees don't end when the statutory warranty does. They last for a reasonable time, and a dealer can't send you to the manufacturer instead of dealing with a problem itself.

8. The Motor Car Traders Guarantee Fund

If a licensed dealer fails to meet certain obligations and you lose money, you can claim compensation from the Motor Car Traders Guarantee Fund, up to $40,000. For example, a dealer might fail to:

• transfer clear title, or refund a deposit after a contract is cancelled
• deliver a car you've paid for
• pay the transfer fee or duty, or supply the RWC you need to register the car
• carry out statutory warranty repairs

There's no fee to claim, but you need to try to resolve the problem with the dealer first. The Fund doesn't cover private sales or auctions, mechanical faults outside the statutory warranty, or consequential losses such as lost wages.

Before you sign: a quick checklist

• Check the dealer's LMCT number on the public register.
• Read the used car notice: price including fees, odometer reading, written-off status and warranty status.
• Ask whether there's a defect notice, and read it carefully. Consumer Affairs Victoria advises not buying a car whose defect notice is vague.
• Inspect and test drive the car. Our used car buying checklist covers what to look for.
• Remember that taking the car home during the 3 business days ends your cooling-off right.

Have a question about a car or the paperwork? Get in touch with Driveon Australia. We're happy to walk you through it before you commit.

Common questions

How long is the cooling-off period when buying a used car from a dealer in Victoria?

Three clear business days after you sign the contract, not counting weekends or Victorian public holidays. You cancel by giving the dealer written notice. For a used car the dealer can keep $100 or 1% of the price, whichever is greater. You lose the right if you take delivery of the car during those three days.

Which used cars get a statutory warranty in Victoria?

Cars sold by a licensed dealer that were built no more than 10 years before the sale and have travelled less than 160,000 km. The warranty lasts 3 months or 5,000 km, whichever comes first. Commercial vehicles and motorcycles are not covered.

How do I check a car dealer is licensed in Victoria?

Search the dealer's name or LMCT number on Consumer Affairs Victoria's public register of motor car traders. Licensed dealers must also show 'LMCT' and their licence number in every advertisement.