On 8 August 2015, Faith Cheok conducted her radio segment on the issues involved with buying a car. She began by emphasising the fact that there will generally be two contracts when you buy a car – a motor vehicle contract (to purchase the car) and a finance contract (if a loan is needed to purchase the car).
Consumers may feel pressured into buying cars which can be extremely problematic, especially in cases where English is not the person’s first language. Faith recommends always reading the contracts before you sign them and to ask if you don’t understand something. Don’t let the salesman pressure you into signing anything on the spot – you are welcome to go away and think about it.
There is no cooling-off period for motor vehicle contracts in WA, so if you sign a contract and then change your mind later, you will usually be required to pay 15% of the total purchase price of the vehicle in order to terminate the contract.
Another reason why it is always important to read the contract first is so that you are aware of any extra costs or optional extras you may be agreeing to. Faith talked about a client that CCLSWA assisted who had unknowingly agreed to purchase $8,000 of optional extras, such as window tinting and a tow bar, and $5,000 of extra insurance policies. In this case, CCLSWA was able to negotiate a successful outcome for our client, but usually you will be bound by all of the terms and conditions in a contract once you have signed it.
Finally, Faith spoke briefly about contracts for finance. If you do need a finance contract, it is important to include a clause in the motor vehicle contract stating that it is “subject to finance”. This means that if you are unable to get a loan, you may not have to go through with buying the car and may not have to pay the 15% termination fee. It is also important to make sure that you will be able to afford the repayments and interest rate that the finance company is offering you – and again, do not sign the contract until you have read and understood it.
If you are having problems with a car contract that you have entered into or you start having difficulties making repayments on your car loan, you may wish to call our advice line on (08) 9221 7066.
For more information about buying a car, you may wish to visit Legal Aid’s website