Bought a used car from a dealer: your ACL rights explained

Your used car from a dealer developed a serious fault weeks later — or the promised full service history doesn't exist. Is "it's a used car, what did you expect?" a valid legal position?

It isn't. When you buy a used car from a dealer in Australia, the Australian Consumer Law (ACL) gives you the same consumer guarantees that apply to other goods bought from a business (sales by auction are an exception, covered below). They don't disappear because the car is second-hand, the dealer's warranty has expired, or your contract says "sold as is".

Quick answer

If you buy a used car from a dealer as a consumer (section 3, below), the ACL consumer guarantees apply automatically, though at a sale by auction only the title guarantees apply. The most important is section 54 — acceptable quality: the car must be safe, durable and free from defects to the standard a reasonable consumer fully acquainted with its condition would regard as acceptable, given its age, price, mileage and how it was described. If the failure is major, you can reject the car for a refund or replacement rather than accept a repair, provided the right to reject hasn't been lost under section 262 (for example, because the rejection period has ended). A "sold as is" clause or an expired dealer warranty does not remove that right.

What the law actually says

The ACL is Schedule 2 of the Competition and Consumer Act 2010. It applies where you acquired the car as a consumer under section 3 — either because the price was $100,000 or less, or because the goods are of a kind ordinarily acquired for personal, domestic or household use. Either limb is enough. Many passenger vehicles fall into that second category, so a vehicle costing more than $100,000 may still qualify. A vehicle or trailer acquired mainly to transport goods on public roads also qualifies, whatever its price. Section 3 excludes goods acquired for re-supply, or to use up or transform, in trade or commerce, in production, manufacture or repairs, so check how it applies to you. Unusual commercial, specialist or fleet vehicles need closer analysis.

The key consumer guarantees for used car buyers are:

• Section 54 — Acceptable quality. The car must be safe, durable, free from defects, acceptable in appearance and finish, and fit for all the purposes cars of that kind are commonly supplied for, judged at the time of supply. The standard is adjusted for age and price — a ten-year-old car with 180,000 km is not expected to perform like a new one — but it must still be sufficiently safe and fit for ordinary use given what you paid and what you were told.

• Section 55 — Fitness for any disclosed purpose. If you told the dealer you needed a car able to tow a caravan or handle highway driving, the car must be reasonably fit for that purpose — and for any purpose the dealer said it was fit for — unless the circumstances show you didn't rely, or it was unreasonable to rely, on the dealer's skill or judgment.

• Section 56 — Match the description. If the car was sold as having a full service history, no accident history or genuine low kilometres and that proves false, section 56 may be engaged — and the same facts often support a misleading conduct claim under section 18.

• Section 18 — Misleading or deceptive conduct. If the dealer made a false statement about the car — even without intending to deceive — that's a separate breach of the ACL and another route to compensation.

The remedies sit in sections 259–263 of the ACL: section 259 gives you the right to a remedy, section 260 defines a major failure, section 261 covers how a dealer may remedy a non-major one, and sections 262 and 263 govern rejection. Everything turns on whether the failure is major or non-major — see our guide to what "major failure" really means under the ACL.

When is a used-car failure major?

Under section 260, a failure is major if any of the following applies:

• a reasonable consumer fully acquainted with the nature and extent of the failure would not have acquired the car;
• the car departs significantly from the description, sample or demonstration model by reference to which it was supplied;
• the car is substantially unfit for its common purpose and cannot easily and within a reasonable time be remedied to make it fit for that purpose;
• the car is unfit for a particular purpose you made known to the dealer and cannot easily and within a reasonable time be remedied to make it fit for that purpose; or
• the car is unsafe.

A serious engine, transmission, structural or safety defect may amount to a major failure, but the result depends on the facts — the severity, safety implications, repairability and recurrence of the defect, together with the car's age, mileage, price, condition and description.

Two or more failures can also be considered together. They may collectively amount to a major failure if a reasonable consumer fully acquainted with their nature and extent, taken as a whole, would not have acquired the car. There is no fixed number of unsuccessful repair attempts that must happen first — which matters for used cars with recurring cooling, electrical, transmission or warning-light problems.

What remedy you can demand

For a major failure, section 259(3) gives you two alternatives. You can reject the car — and once you have rejected it, choose between a full refund and a replacement vehicle of the same type and similar value, if one is reasonably available — or you can keep the car and recover compensation for the reduction in its value. Those two paths are alternatives to each other, and the dealer cannot insist on repair either way. Rejection is only available while the rejection period is still running, which the Common mistakes section below explains.

Your refund-or-replacement claim runs against the dealer. Sections 271 and 272 may separately support a damages claim against the manufacturer for certain consumer-guarantee failures, but that is not the same election you have against the dealer.

Separately from whichever path you take, section 259(4) lets you recover damages for other losses that were a reasonably foreseeable result of the failure — towing, a hire car while yours is off the road, the independent inspection you paid for. That applies to non-major failures too, provided the loss was caused by the failure, you can evidence it, you took reasonable steps to limit it, and you don't claim the same loss twice.

For a non-major failure that can be remedied, the dealer gets the first reasonable opportunity to fix it, by repair, replacement or refund, within a reasonable time. If the dealer refuses or doesn't do so within a reasonable time, you can have the failure remedied elsewhere and recover the reasonable cost, or reject the car (subject to section 262).

When this applies (and when it doesn't)

The consumer guarantees apply when:

• You bought from a dealer or other business acting in trade or commerce, not a private individual.
• You acquired the car as a consumer under section 3 (above), not for re-supply or to use up or transform, in trade or commerce, in production, manufacture or repairs.
• The fault is not something you caused through misuse, neglect, or an accident after purchase.

The guarantees are adjusted but not removed for used cars: a $4,000 car with 200,000 km is not expected to last as long as a $25,000 car with 60,000 km, but both must be sufficiently safe and fit for ordinary use.

State statutory dealer warranties. Every state and territory also gives some used cars bought from a dealer a short statutory warranty (in South Australia, a dealer's duty to repair). Eligibility depends on the car's age and kilometres and, in some states, its price; commercial vehicles and some auction sales are commonly excluded, and items such as tyres and batteries often aren't covered. The usual cover is 3 months or 5,000 km for younger, lower-kilometre cars, with different thresholds or periods in Queensland, WA, SA and Tasmania. In NSW, for example, the dealer guarantee covers cars under 10 years old with under 160,000 km for 3 months or 5,000 km, whichever comes first. These rules sit alongside, not instead of, the ACL — check your state consumer body for the local rules.

The guarantees generally do not apply when:

• You bought from a private seller rather than a dealer acting in trade or commerce. The consumer guarantees generally do not apply to genuine private sales.
• You bought at a sale by auction (one conducted by an agent of the seller; not every online "auction" counts). The acceptable quality, fitness for purpose and description guarantees don't apply to those sales, though the guarantees about title (sections 51 to 53) and misleading-conduct protections still do. State dealer-warranty rules on auctions vary, so check with your state consumer body.
• The defect was specifically drawn to your attention before purchase — if the dealer showed you an inspection report listing the fault and you bought anyway, you can't claim on that fault (other, undisclosed faults are still covered). The same goes for a fault that an inspection you did before buying ought reasonably to have revealed.
• You simply changed your mind. The guarantees cover failures, not buyer's remorse.
• You caused the damage yourself after taking possession.

One thing that does not affect your ACL rights: the dealer's own warranty, or a state statutory dealer warranty, expiring. A dealer's warranty is a contractual promise, not a statutory guarantee, and the ACL sets no single fixed guarantee period for a used car, though limitation laws and forum rules still apply and rejection rights can be lost. A warranty expiry therefore does not decide whether your ACL rights remain available.

What to do today

If you believe a consumer guarantee has been breached:

1. Get an independent inspection. Before contacting the dealer, have a qualified mechanic report in writing on the fault, its likely cause, severity and safety implications, whether it was present or developing at supply, whether wear and tear explains it, and whether it can easily and within a reasonable time be repaired. This is your key evidence.

2. Check your payment options. If you paid any part of the price by card, ask your card provider now whether a chargeback is available; both follow the card scheme's or provider's own time limits, not the ACL's.

3. Gather your documents. Collect the contract, the dealer's written representations (emails, listing printout), warranty documents and service records. Write down any verbal representations: what, when and who.

4. Write to the dealer. State the purchase date, the fault, which guarantee it breaches and the remedy you want. Give 14 days to respond (a practical default, not an ACL requirement).

5. Be specific about major vs non-major. If you believe the failure is major, say so explicitly and identify which limb of section 260 you rely on, addressing the seriousness, safety implications, repair history and whether the problem can easily and within a reasonable time be remedied. Then invoke your right under section 259(3) to choose between rejecting the car (if the right to reject hasn't been lost under section 262) and keeping it while claiming compensation for the reduction in its value.

6. Don't keep driving an unsafe car. Continuing to use a car you've identified as unsafe can complicate your claim.

7. If you are rejecting the car, do it properly. Notify the dealer in writing, state the ground, and make the car available. You would normally return it — but under section 263, where returning it would involve significant cost because of the nature of the failure or the size of the goods, the dealer must collect it, within a reasonable time, at their own expense. An unsafe or undriveable car may fall within that rule; confirm collection arrangements in writing.

Not sure how to draft the demand letter? fairgo can generate one for you, with the relevant ACL sections filled in automatically. Start your letter here.

What if the business refuses

If your written demand is ignored or rejected:

• Your state or territory consumer protection body. It may help, for example by contacting the dealer or conciliating, if your complaint meets its criteria. Most expect you to have tried to resolve the matter with the dealer first, and eligibility rules vary by state and dispute type (in the ACT, for example, statutory conciliation applies only where the remedy you seek is worth $5,000 or less). These bodies don't make binding orders in ordinary consumer disputes and can't compel the dealer to take part. Contacts are at /agencies.

• A tribunal or court with jurisdiction. If conciliation does not resolve it, a tribunal or court can give you a binding outcome. In NSW, Victoria, Queensland, the ACT and the NT, a tribunal (NCAT, VCAT, QCAT, ACAT or NTCAT) hears many consumer claims within its limits; in Western Australia, South Australia and Tasmania, ordinary consumer claims go to the Magistrates Court. Jurisdiction depends on each forum's enabling legislation, the type of claim and the amount, so confirm the forum and its current thresholds on the official site before filing. You can usually run a claim without a lawyer, though some forums restrict legal representation (QCAT, for example, requires permission). Check current filing fees on the official site, and ask about fee exemptions, waivers or deferrals if cost is a concern. Our guide to choosing the right tribunal or court has more.

• Dealer licensing regulators. Motor dealers are licensed under state and territory law, and the licensing regulator can investigate dealer conduct separately from your own claim. That is generally a conduct complaint rather than a route to your refund. Some states and territories, including NSW, Victoria, Queensland, South Australia and the ACT, also run motor dealer compensation funds that can pay in limited circumstances, each with its own eligibility rules, caps and time limits (Victoria's fund, for example, can't pay a claim that relates to a breach of the ACL) — ask your state consumer body.

• ACCC. It handles systemic conduct, not individual disputes. Report a pattern of misleading conduct there, but pursue your own refund through your state or territory consumer body or a tribunal or court with jurisdiction.

Common mistakes

• Continuing to drive the car without documenting the fault. The dealer may argue continued use worsened the damage. Get the inspection done promptly.

• Accepting a repair when you're entitled to a refund. If the failure is major, you have the right to choose your remedy (subject to section 262, including the rejection period). You don't have to accept a repair offer. If you're unsure whether your failure is major, read our guide on what "major failure" really means under the ACL.

• Waiting too long. The ACL sets no fixed warranty period for used cars, though limitation laws and forum rules still set time limits for claims. If you want to reject, you must do so within the rejection period, and under section 262 that period runs from the time the car was supplied to you — lasting as long as it would be reasonable to expect this kind of failure to become apparent, judged by the type of vehicle, how it is likely to be used, how long it is reasonable to use it, and how much use it would take before the fault showed. For a latent engine or structural fault, that period can run many months past purchase. Acting promptly still helps you rebut an argument that the fault developed after sale.

• Signing away your rights. Dealers may ask you to sign that the car is sold "as is" or to waive future claims. Under section 64 of the ACL, a term is void to the extent that it purports to exclude, restrict or modify a consumer guarantee or your remedies — signing one does not make it enforceable. (For a vehicle not of a kind ordinarily acquired for personal, domestic or household use, section 64A may let the contract limit the dealer's liability to repair, replacement or their cost (except for the title guarantees in sections 51 to 53), unless you show relying on that limit isn't fair or reasonable.)

Related reading

• Replacement, repair or refund: which remedy can you choose?
• Mechanic overcharged or did poor work? Your ACL options
• What "major failure" really means under the ACL
• New car lemon rights Australia: what to do when your car keeps failing
• Business refused your refund? Here's what to do next

This article is general information about Australian Consumer Law, not legal advice. It also touches on complaint and escalation pathways (state and territory consumer bodies, tribunals and courts, the ACCC, and motor dealer licensing regulators and compensation funds), state statutory dealer warranties, card chargeback rules and limitation laws, whose scope, rules, thresholds and processes sit outside the ACL or can change. Confirm the current position with the relevant body before lodging. For advice on your specific case, see your state or territory consumer body — full list at /agencies.