Are you protected when you buy a lemon?

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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When looking for a car it is important that you research and check it thoroughly to know that you are not buying a dud. However, what happens when you have thought you have ticked all the boxes to finding the perfect car only to realise it is a lemon? Will you be protected by the consumer protection laws? Here are four things you need to know if you have bought a lemon.

The short of it…

It all depends on where you buy your car. The lines are a bit blurry when it comes to being protected by a car that you have purchased online. However, if you buy a new or used car from a dealer you are protected under the Australian Consumer Law. The Australian Consumer Law does not cover private sales, therefore, the onus is on you to make sure that you have the car thoroughly checked before purchasing it.

The long end of it…

Buying a lemon is a real issue for top of the line brands and brands that are usually associated with being troublesome. No matter how fancy the car is, there is a 14% chance that you could be buying a lemon. This is why conducting a thorough check or even sending a car to the mechanics is important before you hold on to it for too long. Data released by NRMA and Choice revealed that 66% of consumers who had just recently bought new cars experienced problems with their car in the first five years. This number took into account top of the range cars that were purchased from a dealership that ended up costing the consumer more money in terms of repairs.

A warranty can be your saving grace

If you have bought a car under warranty you will be protected as a consumer to return the vehicle and have the issue sorted out. However, those who have not purchased their vehicle under warranty can face a different fate. If you have purchased your car from a private sale, then it is likely that you will be partly covered by consumer guarantees.

What else does the consumer law stipulate for you

Your car will be protected if it has a major failure that complies with consumer guarantee. This basically means that if you have failed to thoroughly check the car and were not aware of the full extent of its problems you most likely won’t be covered by the guarantee, unlike someone who has checked.

If you have checked the car thoroughly, but it has spent its first five years strapped in the air being surveyed by mechanics than on the road you are covered by the guarantee. It’s important that you read further into the ACC consumer protection against lemons to find out about the full process when dealing with a lemon.

What can you do about your lemon?

Cars are expensive and buying a lemon can leave anyone with a bitter taste in their mouth. There are various steps that you can take to get a refund on your lemon.

  • Familiarise yourself with the consumer protection laws of the ACCC
  • Contact the dealer
  • Keep all communication in writing
  • Mention where the major failure is

Always ensure that you have thoroughly checked the car, whether new or used, before purchasing with your money or a loan.

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