Selling a used vehicle (standard sale)
As a motor dealer, you must follow certain rules when selling a used vehicle.
Display and signage
When you sell a used vehicle, you must use signs to tell your customers:
- if there is no cooling-off period (for sales by auction or on consignment)
- whether or not a statutory warranty applies to the sale.
Single sign
You may use a single sign for your entire premises if, at those premises, you only sell:
- unwarranted vehicles
- vehicles with no cooling-off period.
If you only use a single sign, you must make sure that its information applies to every vehicle with no exceptions.
You must:
- place the sign at your main entrance (this will usually mean the main entrance of your office)
- make sure that it’s clear, readable and easy to see
- use letters that are at least 10cm tall.
Individual signs
For any information that varies between vehicles on the same premises, you must have individual signs on each vehicle.
This could be to tell customers that a vehicle has:
- no statutory warranty
- no cooling-off period
- both of the above.
You can still use a single sign for common information (such as if all cars have no cooling-off period, but only some have statutory warranty), but will also need individual signs for information that varies.
An individual sign must clearly refer to a specific vehicle. It might be:
- written on the windscreen
- attached to the vehicle
- next to the vehicle.
In any of these cases, the information on the sign must:
- be close to the price of the vehicle
- be clear, readable and easy to see
- use letters that are each at least 5cm tall.
Pre-purchase
You need to complete the following steps before you sign a contract of sale with the buyer.
Deposit
When the buyer pays you any money, you must immediately give them a receipt. This includes any deposits or an option to buy.
If you sell the vehicle on consignment, you must:
- place the deposit in your trust account
- give the buyer a trust account receipt.
Cooling-off period and statutory warranty
Your customer is entitled to a cooling-off period of 1 business day. They may also be entitled to a statutory warranty.
You must:
- fill in the approved form before you sign a contract
- give the buyer a copy of the approved form.
Cooling-off period and statutory warranty (motor dealer or chattel auctioneer to buyer) form
If you do not give the buyer a copy of the form:
- the buyer is entitled to avoid the contract within 7 days
- you could be fined.
Written-off vehicles
You need to tell the buyer if the vehicle:
- is unregistered and written-off
- is a repairable or statutory write-off (which cannot be registered).
If the vehicle is written-off you must give the buyer a notice. Make sure:
- the buyer signs the notice
- you give the buyer a copy of the signed notice
- you keep a copy of the signed notice.
Contract
The contract must be in writing.
You must:
- complete a contract for sale (purchase contract)
- sign the contract
- get all buyers to sign the contract
- give all buyers a copy of the contract.
You are bound by the contract as soon as it is signed by all parties.
The buyer is bound by the contract only when the cooling-off period ends.
Dealer statement
You need to give the buyer a signed statement telling them about the vehicle’s previous owner. You can include this information in the contract for sale.
The details must include:
- the current date
- the name of the immediately previous owner (this is you, unless you’re selling on consignment)
- the vehicle’s engine number (or chassis number if it’s a caravan)
- its identification number
- its built date
- its odometer reading (both in words and figures)
- the price the buyer is paying.
You must include if you are aware that:
- the odometer has ever been replaced
- the engine has ever been replaced (include the date, if you know it).
Clear title
A vehicle that has a clear title of ownership:
- is entirely owned by the seller (this is you, unless you’re selling on consignment)
- may legally be sold by that person
- is not subject to any mortgage, security or debt.
You must guarantee to a buyer that a vehicle has clear title. You must include this guarantee as a statement in your contract.
Payment and receipts
You must give a receipt whenever you accept any money from a buyer.
If you sell the vehicle on consignment, you must:
- deposit the money in your trust account
- give the buyer a trust account receipt.
A receipt will need to include:
- your name and signature
- the name of your principal licensee
- the buyer’s name
- the total cost of the vehicle
- the amount of money paid in that transaction.
The receipt must also clearly describe the vehicle by including its:
- make, model and colour
- identification and registration numbers
- engine number (for most vehicles) or chassis number (for caravans).
Trade-in
To complete a trade-in, you must get a signed statement from the buyer. It will need to include:
- their details
- details of their traded-in vehicle.
You can include this information in the contract for sale.
Transactions register
You need to keep a transactions register at each place of business. You have a maximum of 24 hours after a transaction to enter it into the register.