On 8 October 2016, Principal Solicitor Gemma Mitchell discussed issues that may arise when buying a car. Below is a summary of her radio show:
When you buy second-hand cars, either privately or from a dealer, you should always make sure you budget and shop around for the right deal.
If you buy a car privately, the most important thing to do is to make sure there is no money owing on it from the seller or a previous owner. You can do this on the personal property securities register at www.ppsr.gov.au. You will need the car’s VIN number and it costs $4 to check the PPSR. The check could potentially save you a lot of stress and drama down the track.
We have had many clients who had their car repossessed because a prior owner had an unpaid car loan, and the client did not check the PPSR. When that happens, there is not much you can do – especially if you can no longer find or contact the seller. If there is money owing on the car, the bank is entitled to repossess the car if the debt is not repaid, even if you are the owner.
Purchasing from a dealership
When you buy a car from a dealer, there will be two contracts – a “car contract” (contract to buy the car) and a finance contract (the car loan).
Be wary of add-ons you don’t want or need. The costs of extras such as window tinting and extended warranties can really add up, and it may be cheaper to get them elsewhere. Some dealerships will also try to trick you into buying expensive warranties and insurance products that often contain numerous exclusions. These are sometimes known as junk insurance or gap insurance.
Lastly, and most importantly, there is NO cooling off period for car contracts in Western Australia. As soon as you sign the contract, you are bound by its terms and conditions.
Subject to Finance
If you sign a finance contract to pay for your car, you should always review the repayments, interests rate, and duration of the loan to make sure you can afford the repayments.
You should also make sure that when you sign a car contract, you ensure the words “subject to finance” are written in the contract. This will mean that the car contract will only be binding if you are approved for finance.
Even if your car contract says ‘subject to finance’ you cannot terminate the contract after one attempt to get finance. You must make reasonable attempts to get finance – this means applying to more than one lender.
- Always do a PPSR check at ppsr.gov.au when purchasing a secondhand vehicle from a private seller
- When buying from dealers, be wary of add-ons and “junk warranties”
- Remember there is no cooling off period in Western Australia
- Make multiple attempts to seek finance
- If you ever have an issue about your car loan, or a car you have purchased from a dealer – you can get more information by visiting our website cclswa.org.au or calling our advice line: 9221 7066